TMTPOST --   The   Trump administration   is   taking   an aggressive   step to   reprogram   the operations of major chipmakers, moving forward its   plan to take   stakes   in the troubled Intel Corporation.

Credit：Howard Lutnick

The   United States   now   "fully owns and controls 10% of INTEL, a Great American Company that has an even more incredible future,"   President Donald Trump announced in a   post on Friday. Trump said he made a request   for   a 10% stake   in Intel during his meeting with   the CEO Lip-Bu Tan,   and Tan   agreed to do so. "He walked in wanting to keep his job, and he ended up giving us $10 billion for the United States," Trump told reporters.

Trump in his post touted "a great deal for America"   since the   U.S.   government "paid   nothing   for these   shares"   now valued   at around $11 billion. He   also highlighted significance   of the deal   as   Intel   is building   cutting-edge semiconductors,   which is "fundamental to the future of our Nation."   

U.S.   Commerce Secretary Howard Lutnick   also confirmed   the news   in a   post   on   X. He described the deal   as   a "historic   agreement".that strengthens U.S. leadership in semiconductors, which will both grow our economy and help secure America ’ s technological edge.   Lutnick   also thanked to Tan   for making   the deal that   is "fair   to Intel and fair to the   American People."

Intel later Friday unveiled some   details of the agreement. The company   suggested it agreed to give a nearly 10% stake to   the Trump   administration   in exchange   for   a total of $11.1   billion   funding   under   the   CHIPS and Science Act   of 2022   ( CHIPS Act )   .

Under   the agreement, the U.S. government will make an $8.9 billion investment in Intel common stock   on top of   the $2.2 billion in CHIPS Act grants Intel has received to date. "The government ’ s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program,"   said Intel in a   statement.

With the $8.9   committed investment, the U.S. government agreed   to purchase 433.3 million primary shares of Intel common stock at a price of $20.47 per share, equivalent to a 9.9% stake in the company. The federal government thus   became one   of Intel ’ s   biggest   shareholders,   and   took   the stakes at an over 17%   discount from Intel ’ s   closing on Friday. Shares of the company   rose 5.5%   that day   following Trump ’ s announcement.

Despite the investment, the U.S.   government   will have no board seat or other governance or information rights, and   it agrees   to vote with the Company ’ s Board of Directors on matters requiring shareholder approval, with limited exceptions.   The government will receive a five-year warrant, at $20 per share for an additional five% of Intel common shares, exercizable only if Intel ceases to own at least 51% of the foundry business.

Signed into law in August 2022, the CHIPS Act allocated $53 billion in federal incentives for domestic semiconductor manufacturing and research and development ( R&D ) , of which $39 billion is set aside for a financial assistance program — also called the CHIPS for America Fund — administered by the U.S. Department of Commerce to build new and expand existing semiconductor facilities. Companies are also eligible for a 25% tax credit.

While U.S. and foreign companies with facilities in the United States are eligible for the CHIPS Act, Intel, as   the only American company capable of making advanced chips on U.S. soil,   was already deemed as the biggest beneficiary of the federal incentives.

Intel   under the act was awarded $7.9 billion in grants for commercial semiconductor manufacturing and as much as an additional $3 billion for the Pentagon ’ s Secure Enclave program. It also has an option to draw an $11 billion loan under the act.  

But Intel has   fallen badly behind competitors   in recent years.   The company last month   reported its foundry business   booked an operating loss of $3.2 billion for the second quarter. And the   same month saw it warned   that the business may   be   paused or discontinued entirely   if it could not   secure   a   customer on its next technology   cycle.  

Analysts said   the   Trump administration may   take more   actions to   bail out the chipmaker   following   conversion   of CHIPS   Act grants to stakes.

"This seems to indicate the government is definitely going to play a much more influential role in the company, particularly to keep the foundry alive in the U.S." through some combination of dealmaking or changes at Intel, said Ray Wang, a semiconductor analyst at research and advisory firm Futurum Group.