Trump Eyes 10% Stake in Intel, Leveraging the “China Card” Amid Strategic Industry Push

On August 18 local time, Bloomberg reported—citing a White House official and other informed sources—that the Trump administration is actively considering converting part or all of the CHIPS and Science Act funding into equity, initiating negotiations to acquire a 10% stake in Intel Corporation, a chipmaker currently facing significant operational challenges.

Over recent months, President Trump has increasingly focused on Intel. Initially, he pressured CEO Chen Liwu to resign, citing alleged ties to China. Later, he reversed course, publicly praising Chen’s leadership as “very successful.” Reuters observed that Trump has adopted an unprecedented interventionist approach toward corporations, particularly in semiconductors and rare earths, facilitating multi-billion-dollar government collaborations. These include paid agreements with NVIDIA and strategic supply arrangements with MP Materials.

Clark Geranen, Chief Market Strategist at CalBay Investments, commented that the U.S. government is “playing the China card,” aiming to exert greater control over certain production activities within these firms. While such moves raise concerns from a free-market perspective, Geranen noted that companies are cooperating pragmatically, and this level of intervention may prove temporary.

Mira Ricardel, former Deputy Under Secretary of Commerce for Industry and Security during Trump’s first term, stated that depending on the structure, equity investment could allow the government to influence and oversee Intel’s operations—particularly those involving China—in ways that regulatory oversight or subsidies cannot.

In response, Chinese Foreign Ministry spokesperson Lin Jian reiterated China’s firm opposition to the U.S.’s aggressive containment of its semiconductor industry. He criticized the politicization and securitization of economic and technological issues, and condemned the U.S. for coercing other nations to suppress China’s chip sector. Lin warned that such actions hinder global semiconductor development and will ultimately backfire.

On August 14, Bloomberg had already reported that the Trump administration was in talks with Intel to explore a government stake aimed at expanding domestic manufacturing. The news prompted a 7.4% surge in Intel’s stock, lifting its market capitalization to approximately USD 104.4 billion.

However, by August 18, Intel’s shares had declined 3.7%, partially reversing the earlier gains driven by speculation of government investment. Estimates suggest that a 10% stake in Intel would be valued at around USD 10 billion. The company is expected to receive USD 10.9 billion in CHIPS Act funding for commercial and military production, a sum that could feasibly cover the proposed equity acquisition. While the exact valuation remains under discussion, such a stake would position the U.S. government among Intel’s largest shareholders. Intel declined to comment on the reports, and the White House did not respond to media inquiries.

According to The Wall Street Journal, one option under consideration involves converting a portion of Intel’s CHIPS Act allocation into equity. A source indicated that Commerce Secretary Gina Raimondo is seeking to optimize the use of these funds to generate stronger investment returns.

Reuters cited analysts who believe that government support could provide Intel with breathing room to revive its loss-making foundry business. However, the company continues to face challenges, including a weak product roadmap and difficulties attracting clients to its new facilities.

Once a dominant force in the semiconductor industry, Intel has struggled in recent years, losing both market share and technological leadership. Since early last year, its stock has fallen by more than 50%, and the company is grappling with rising operational costs. Analysts have also noted that Intel’s product lineup is increasingly outdated in the age of artificial intelligence.

David Wagner, Head of Equities and Portfolio Management at Aptus Capital Advisors and an Intel shareholder, remarked that government intervention may signal that Intel’s competitive position is more precarious than previously thought. While skeptical of using taxpayer funds to invest in private companies, Wagner acknowledged that such a move is preferable to nationalizing Intel outright.

Intel was the largest beneficiary of the CHIPS Act passed in 2022, which aimed to counter China’s rise in semiconductors. Former CEO Pat Gelsinger successfully aligned Intel with U.S. strategic interests, securing USD 8.5 billion in direct subsidies and USD 11 billion in low-interest loans.

Intel had planned to build a chip manufacturing hub in Ohio as a cornerstone of its turnaround strategy. However, financial constraints have delayed the project until after 2030. Since assuming the CEO role in March, Chen Liwu has focused on restructuring Intel’s finances, though analysts caution that this may conflict with Trump’s broader push to revitalize American manufacturing.

In Q2 of this year, Intel’s losses widened to USD 2.9 billion. Analysts suggest that given the company’s current challenges, expanding domestic capital expenditure may prove difficult. Some believe that if Chen and other executives fail to reverse the financial trajectory, Intel may ultimately require direct government assistance.

Bloomberg noted that the Trump administration’s latest move signals a willingness to intervene directly in strategic industries. Last month, the Department of Defense proposed a USD 400 million preferred equity purchase in MP Materials, making the Pentagon its largest shareholder—a move that challenges traditional boundaries between public and private sectors. A source revealed that some of Trump’s deals may follow the MP Materials blueprint, involving equity investments, guaranteed procurement, loans, private financing, and government partnerships. Many within the administration believe this approach reassures investors that projects are backed by “the world’s most credible institution,” while also safeguarding taxpayer funds.

The report concludes that these major investments are unlikely to be isolated. Trump remains committed to supporting domestic champions in sectors deemed vital to national security, framing the strategy as part of a broader effort to compete with China.

The U.S. government has precedent for such actions. During the 2007–2009 financial crisis, it acquired equity in General Motors, later exiting in 2013. The Wall Street Journal notes that while the terms of the Intel deal are still being finalized, the negotiations have already reignited political debate in Washington.