Less than two weeks after President Donald Trump called for the ouster of Intel Corp.’s Lip-Bu Tan, the company’s chief executive officer has a shot at securing billions of dollars in fresh capital that could help him turn around the troubled US chipmaker.
The Trump administration is in discussions to take a stake of about 10% in Intel, possibly by converting grants made to the company under the US Chips and Science Act into equity. That could allow Intel to tap about $10 billion in capital as Tan works out a strategy for revival.
In another surprise, SoftBank Group Corp. agreed to take a $2 billion stake in Intel, as the Japanese company seeks a broader role in the artificial intelligence boom. Founder Masayoshi Son already owns a majority stake in chipmaker Arm Holdings Plc and has laid plans to compete with Nvidia Corp. in AI chips. Intel’s chipmaking skills could help SoftBank manufacture chips to run — and possibly train — AI models like ChatGPT.
Intel shares rose 7% to $25.31 in New York trading on Tuesday. SoftBank’s own stock price fell 4% in Tokyo.
Earlier this month, Tan’s hold on his CEO role looked precarious after Trump called on him to resign over alleged conflicts of interest. Yet the executive quickly visited Trump at the White House to clear the air, with the president then praising the Intel CEO for his career success and “amazing story.”
That set the stage for the government’s possible investment, which would make the US the chipmaker’s largest shareholder. The federal government is considering an investment that, under one scenario, would involve converting some or all of the $10.9 billion in grants the company had won under the Chips Act, people familiar with the situation said, asking not to be identified because the information is confidential. The company can also draw on up to $11 billion in loans under the 2022 law.
Commerce Secretary Howard Lutnick said on Tuesday that the administration was in discussions with the company regarding a possible investment. “We’ll deliver the money which was already committed under the Biden administration, we’ll get equity in return for it,” Lutnick said in an interview with CNBC, confirming Bloomberg’s previous reporting.
The grant money, which was originally designed to be disbursed over time as Intel meets project milestones, is roughly enough to pay for the targeted holding. At Intel’s current market value, a 10% stake in the chipmaker would be worth around $10.5 billion. The exact size of the stake, as well as whether the White House chooses to move ahead with the plan, is still in flux, Bloomberg reported on Monday.
White House spokesman Kush Desai declined to comment on the specifics of the discussions, saying only that no deal is official until it’s announced by the administration. Intel declined to comment.
SoftBank’s investment is another unconventional bet on Tan’s ability to revive Intel’s fortunes. The Japanese company announced its plan to buy new shares at $23 a share, a small discount to Intel’s last close. Son has ambitions to design an energy-efficient AI chip through what he calls the “Izanagi” project to compete with Nvidia’s products, though that has yet to translate into a marketable product.
Son held talks with Intel’s chief executive about buying the company’s contract chipmaking business before agreeing to make the $2 billion investment, the Financial Times reported, citing people familiar with the talks. The investment doesn’t preclude a bigger deal for that part of Intel’s business, the newspaper said.
A big question is whether a government holding and SoftBank’s vote of confidence would help reinvigorate Intel’s business. The tech pioneer has fallen behind Taiwan Semiconductor Manufacturing Co. in contract chipmaking and Nvidia Corp. in chip design, missing out on a boom in spending on artificial intelligence.
Last week, Intel’s stock had its biggest one-week rally since February, after the initial news of the government’s possible investment.
Tan, who served on SoftBank’s board for two years, is seeking a turnaround. But his efforts have largely been focused on cutting costs and eliminating jobs. Intel will add large-scale manufacturing capacity only once customers are committed to using its more advanced production techniques, Tan said last month, sparking concern among investors that the company may be bowing out of the race for semiconductor leadership.
The Trump administration is particularly focused on shoring up Intel’s sprawling project in Ohio, the home state of Vice President JD Vance. Intel has repeatedly delayed the anticipated opening of that site, which the company originally envisioned as the world’s biggest semiconductor facility.
Beyond Intel, the White House official also floated the possibility that the administration could convert other Chips Act awards into equity stakes. It’s not clear whether that idea has gained traction broadly within the administration or whether officials have broached the possibility with any companies that could be affected.
The Chips Act set aside $39 billion in manufacturing grants — plus loans and tax credits — to revitalize the American semiconductor industry after decades of production shifting to Asia. Using Chips Act money for an Intel stake would mean the chipmaker isn’t necessarily getting a bigger government infusion than expected — possibly just one that’s on a faster timeline. As is the case for all Chips Act winners, Intel’s award was designed as a reimbursement, with the grant money split into tranches tied to specific project benchmarks.
Intel had received $2.2 billion of its award as of January. It’s unclear whether that amount would be included in the possible equity stake, whether the company has received additional disbursements of its award since Trump took office, and on what schedule Intel would receive money under a possible equity stake.
While TSMC and South Korea’s Samsung Electronics Co. are expanding their US operations with Chips Act support, having an American company like Intel building cutting-edge chips on domestic soil has been a priority for both the Trump and Biden administrations.
Biden officials, for example, tried to get companies like Nvidia and Advanced Micro Devices Inc. to consider using Intel as a manufacturing partner, and also explored long-shot ideas like a tie-up between Intel and GlobalFoundries Inc.
Earlier this year, Trump’s team held early-stage conversations with TSMC about potentially operating Intel’s factories — an arrangement from which TSMC has backed away. Trump officials have also internally floated the prospect of seeking an Intel investment from the United Arab Emirates. It’s unclear whether either of those approaches has progressed much past a thought exercise.
Washington has become more aggressive in strategic sectors. The Trump administration’s secured an agreement to receive a 15% cut of AI chip sales to China and took a so-called golden share in United States Steel Corp. as part of a deal to clear its sale to a Japanese rival. That’s while the Defense Department announced a plan that would make it the largest shareholder in US rare-earth producer MP Materials Corp.
The US government and the Japanese tech conglomerate both see the potential for a turnaround at Intel, although each likely values different parts of the business. For the Trump administration, a recovery of the chipmaker’s manufacturing prowess would help win jobs and voters. For SoftBank, Intel’s chip design operations beckon with the promise of high margins.
