【By Observer Net, Xiong Chaoran】On August 18 local time, Bloomberg cited a White House official and other informed sources reporting that the Trump administration is considering converting part or all of the funding from the "Chip and Science Act" (the "Chip Act") into equity, negotiating to acquire 10% of Intel Corporation's shares.

Over the past period, President Trump indeed targeted Intel, first pressuring CEO Andy Bryant to resign on the grounds of his "relationship with China," then later praising him as "very successful." Meanwhile, Reuters noted that Trump has taken an "unprecedented intervention approach" towards many companies, promoting government collaboration worth billions of dollars in the semiconductor and rare earth sectors, such as a paid partnership agreement with NVIDIA and a deal with rare earth producer MP Materials to secure key mineral supplies.

Clark Geranen, Chief Market Strategist at research firm CalBay Investments, said: "The U.S. government is taking a China card, trying to exert more control over parts of these companies' production activities." Geranen added that from a "free market" perspective, this approach is concerning, but companies are cooperating with the government in a "pragmatic way," expecting this "intervention" to be a temporary phenomenon.

Mira Ricardel, who previously served as Deputy Secretary of the U.S. Department of Commerce for Industrial and Security Affairs during Trump's first term, stated: "Depending on the specific structure, equity investment could allow the U.S. government to influence and monitor Intel's activities, especially those related to its Chinese operations. This might not be achievable through regulatory laws or subsidies."

Previously, Chinese Foreign Ministry spokesperson Lin Jian responded, stating that China has repeatedly expressed a serious position against the U.S. maliciously blocking and suppressing the Chinese semiconductor industry. The U.S. is politicizing, overemphasizing security, and instrumentalizing trade, tech, and economic issues, continuously increasing chip export controls on China, and coercing other countries to suppress the Chinese semiconductor industry. Such actions hinder global semiconductor development and ultimately will backfire, harming both sides.

Intel's headquarters in Santa Clara, California, China Visual

As early as August 14 local time, Bloomberg had previously cited multiple informed sources, stating that the Trump administration was negotiating with Intel to discuss allowing the government to take equity in the company to help expand its domestic manufacturing business. The news quickly boosted Intel's stock price, with Intel's stock rising 7.4% at the close of the New York stock market on August 14, making the company's market value reach approximately $104.4 billion.

The Wall Street Journal reported that Intel's stock closed down 3.7% on August 18 local time, wiping out some of the previous gains from the news of potential government investment.

Estimates suggest that 10% of Intel's shares are worth about $10 billion, and the company is expected to receive a total of $10.9 billion in commercial and military production grants under the "Chip Act," which is roughly enough to cover the government's stake. The exact value of the 10% stake in Intel is still under discussion, with Intel's market value estimated at around $100 billion, and acquiring 10% would make the U.S. government one of the company's largest shareholders.

Regarding the relevant reports, Intel declined to comment, and the White House also did not respond to requests for comment.

The Wall Street Journal mentioned that one option currently under consideration is for the U.S. government to convert part of the funds originally allocated to Intel and other companies under the "Chip Act" into equity. An informed source said that U.S. Commerce Secretary Ruddy is seeking to improve the efficiency of the funds allocated to companies like Intel under the act to achieve better investment returns.

Reuters cited analysts who said that the U.S. government's support may give Intel more breathing room, helping it revive its loss-making foundry business, but the company still faces challenges such as weak product roadmaps and difficulties in expanding new factory customers.

As a leading company in the chip industry, Intel has struggled in recent years, gradually losing market share and technological advantages. Since early last year, Intel's stock has fallen by more than 50%, and the company is dealing with growing costs, with industry analysts pointing out that its product lines have become outdated in the era of artificial intelligence.

"The U.S. government stepping in to save this American blue-chip company may mean that Intel's competitive position is worse than anyone feared," said David Wagner, head of equities and portfolio management at Aptus Capital Advisors, a shareholder of Intel. Although he is skeptical about the U.S. government investing taxpayers' money in American companies, he believes, "It's better than letting Intel become a state-owned enterprise."

Previously, the U.S. government passed the so-called "Chip Act" in 2022 to unjustly exclude and suppress the Chinese semiconductor industry, with Intel being the biggest beneficiary of this act. Former Intel CEO Pat Gelsinger successfully tied Intel to the U.S. government, becoming the largest partner in the U.S. chip strategy, receiving $8.5 billion in direct subsidies and $11 billion in low-interest loans.

Intel originally planned to build a chip manufacturing center in Ohio, seeing it as a crucial step to revitalize the company, but the financial difficulties of Intel have threatened the project, with factory construction now postponed to after 2030. Since becoming the new CEO of Intel in March this year, Andrew Bryant has focused on managing the company's finances. However, analysts believe this may contradict Trump's efforts to boost American manufacturing.

Trump and Andrew Bryant, photo

In the second quarter of this year, Intel's losses expanded to $2.9 billion. Analysts say that given the business challenges Intel faces, the company may find it difficult to increase capital spending in the U.S. Some industry analysts believe that if Andrew Bryant and other executives still cannot turn around the financial situation, Intel may eventually need assistance from the U.S. government.

Bloomberg believes that the Trump administration's new moves indicate its intention to directly intervene in key U.S. industries. Last month, the U.S. Department of Defense proposed an unprecedented plan to purchase preferred shares in U.S. rare earth producer MP Materials for $400 million, making the Pentagon the company's largest shareholder, which overturned traditional perceptions of how private enterprises interact with the government.

An informed source revealed that some transactions by the Trump administration may be designed according to the blueprint of MP Materials, meaning there would be equity investments, guaranteed procurement, loans, and private financing, as well as government partnerships. Many people within the U.S. government believe this can convince investors that the project has been supported by "the most creditworthy institution in the world," while also providing protection for taxpayers' funds.

The report states that these major investment measures by the U.S. government are not likely to be one-time deals. Trump insists on supporting domestic leading companies in areas critical to national security, seeking to compete with China.

Previously, the U.S. government had cases of investing in struggling companies. During the 2007-2009 financial crisis, the U.S. government acquired equity in General Motors and later exited in 2013. The Wall Street Journal described the current equity investment transaction's specific terms and structure as not yet finalized, but the negotiations have stirred up political maneuvering for Intel in Washington.

This article is an exclusive article from Observer Net, and it is not allowed to be reprinted without permission.

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