US to take 10% stake in fallen chip giant Intel
The US government has agreed to take a 10 per cent stake in Intel, the struggling chipmaker, in the latest significant intervention by President Trump in corporate America.
Trump confirmed the deal yesterday before an official announcement was released. Shares of the chipmaker were up $1.70, or 7.3 per cent, to $25.20 after the president’s comments.
The development came after a meeting on August 11 between Trump and Lip-Bu Tan, chief executive of Intel, that was sparked by Trump’s demand for the Intel boss’s resignation over his investments in Chinese tech companies.
“He walked in wanting to keep his job and he ended up giving us $10 billion for the United States,” Trump said on Friday.
Intel, founded in 1968, was one of the businesses that put the silicon into Silicon Valley, designing and manufacturing microchips for the burgeoning computer industry. Its dynamic random-access memory chip, released in 1970, was the first to store a significant amount of information.
However, it has struggled to compete after missing out on the boom in artificial intelligence chips. Intel shares have fallen almost 50 per cent in the past five years, overtaken by the AI chipmaker Nvidia, now America’s most valuable public company.
The deal with the US government is seen as the latest sign of the White House taking an increasingly transactional approach to dealing with companies to encourage investment. It follows an agreement with Nvidia and AMD last week for a 15 per cent cut from sales to China to go to the US government, in exchange for issuing export licences.
Trump has also pushed for multibillion-dollar government tie-ups in rare earths, such as an arrangement with the rare-earth producer MP Materials, to secure critical minerals.
Tan, who took the top job at Intel in March, has been tasked to turn around the US chipmaking company, which recorded an annual loss of $18.8 billion in 2024. The company’s last fiscal year of positive adjusted free cashflow was 2021.
This week the Japanese technology investor SoftBank confirmed it was taking a $2 billion stake in Intel. Masayoshi Son, the chairman and chief executive of SoftBank, said the investment “reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role”.
Trump confirmed the deal yesterday before an official announcement was released. Shares of the chipmaker were up $1.70, or 7.3 per cent, to $25.20 after the president’s comments.
The development came after a meeting on August 11 between Trump and Lip-Bu Tan, chief executive of Intel, that was sparked by Trump’s demand for the Intel boss’s resignation over his investments in Chinese tech companies.
“He walked in wanting to keep his job and he ended up giving us $10 billion for the United States,” Trump said on Friday.
Intel, founded in 1968, was one of the businesses that put the silicon into Silicon Valley, designing and manufacturing microchips for the burgeoning computer industry. Its dynamic random-access memory chip, released in 1970, was the first to store a significant amount of information.
However, it has struggled to compete after missing out on the boom in artificial intelligence chips. Intel shares have fallen almost 50 per cent in the past five years, overtaken by the AI chipmaker Nvidia, now America’s most valuable public company.
The deal with the US government is seen as the latest sign of the White House taking an increasingly transactional approach to dealing with companies to encourage investment. It follows an agreement with Nvidia and AMD last week for a 15 per cent cut from sales to China to go to the US government, in exchange for issuing export licences.
Trump has also pushed for multibillion-dollar government tie-ups in rare earths, such as an arrangement with the rare-earth producer MP Materials, to secure critical minerals.
Tan, who took the top job at Intel in March, has been tasked to turn around the US chipmaking company, which recorded an annual loss of $18.8 billion in 2024. The company’s last fiscal year of positive adjusted free cashflow was 2021.
This week the Japanese technology investor SoftBank confirmed it was taking a $2 billion stake in Intel. Masayoshi Son, the chairman and chief executive of SoftBank, said the investment “reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role”.
No comments:
Post a Comment