Why The Us Government Is Taking A Stake In Intel

The Trump management wants nan United States to beryllium the ascendant unit erstwhile it comes to artificial intelligence, and 1 measurement nan management hopes to execute primacy is by bringing semiconductor manufacturing backmost to nan U.S.

To thief pinch that transition, President Donald Trump has introduced potential spot tariffs and policies successful caller months meant to bring much semiconductor manufacturing Stateside.

In precocious August, The Trump management took an unprecedented measurement toward that extremity erstwhile it converted an existing authorities grant, meant for home semiconductor manufacturing, into a 10% equity liking successful Intel.

This woody was structured to assistance nan U.S. authorities further equity successful Intel if nan company’s ownership of its foundry business — which manufactures civilization chips for world customers — drops beneath 50% wrong nan adjacent 5 years.

But Intel isn’t nan only U.S.-based semiconductor company, nor nan only 1 that manufactures its chips overseas. So, really did Intel find itself arsenic nan main characteristic successful nan Trump administration’s plans for AI dominance? Let’s return a look.

Chip context

First, immoderate history: In March 2021, Intel launched its foundry business alongside a committedness to walk $20 cardinal building 2 caller spot manufacturing plants successful Arizona.

A twelvemonth later, nan institution announced its intent to get Tower Semiconductor, a institution successful nan civilization foundry industry, for $5.4 billion, but that didn’t cookware retired owed to regulatory troubles, and nan companies cancelled nan merger successful August 2023.

Since then, Intel Foundry has struggled to summation momentum, and location person been rumors that nan business wasn’t capable to get ample customers connected board.

Then successful 2024, then-CEO Pat Gelsinger announced Intel was taking steps to transition Intel Foundry into an independent subsidiary. This came arsenic committee members called to rotation nan portion retired wholly moreover arsenic nan institution grappled pinch slowing growth, costs cuts and monolithic layoffs.

In November 2024, location was a noticeable agleam spot arsenic nan institution reached a woody pinch nan U.S. authorities for $7.86 cardinal successful national grants done nan 2022 Chips and Science Act meant to boost home semiconductor manufacturing.

Then, Gelsinger abruptly retired successful December 2024.

Lip-Bu Tan’s return

Intel announced that its erstwhile committee personnel Lip-Bu Tan would rejoin nan institution arsenic CEO successful early March. Tan sewage correct to activity pinch a imaginable turnaround scheme that centered connected refocusing nan company, shedding its non-core units, and significantly trimming its workforce.

In July, nan institution said it was scaling backmost immoderate of its manufacturing projects, including its already-delayed $28 cardinal fabrication works successful Ohio.

A fewer weeks later, nan Trump management came knocking.

On August 6, Republican Senator Tom Cotton penned a missive to Intel’s committee of directors, asking astir Tan’s ties to China, including his narration pinch Cadence Design Systems, according to reporting from Bloomberg. Cadence had been charged pinch violating U.S. export controls to China, according to Bloomberg, and has sold tech to a subject schoolhouse successful China. Tan was astatine Cadence’s helm for much than a decade.

The adjacent day, August 7, Trump demanded that Tan resign “immediately,” accusing nan CEO of being “highly conflicted,” though nan President didn’t supply immoderate evidence.

The pursuing week, Tan headed to Washington D.C. to meet pinch Trump to talk ways nan authorities and Intel could activity together toward achieving nan administration’s goals of reshoring semiconductor manufacturing successful nan U.S. Rumors started to swirl that nan U.S. authorities mightiness beryllium mulling an equity liking successful Intel soon after.

On August 18, SoftBank said it was investing $2 cardinal successful Intel. Four days later, nan U.S. authorities announced its woody pinch Intel.

The deal ensures that Intel gets nan assistance money it was already awarded, and nan Trump management is claiming that it will beryllium a passive investor that will ballot alongside Intel’s interests. But will that really thief Intel?

What will hap adjacent is simply a spot unclear.