In the halls of tech, Intel has been a much-respected, at times even beloved, American institution. And while the company over the last decade has struggled to keep pace as NVIDIA surged ahead in AI-driven growth and market valuation, it seems that tech industry has been pulling for it to find its footing. But President Trump’s decision to invest nearly $10 billion in exchange for a 10 percent equity stake in the company has met with mixed reviews, even from Intel itself.
At first blush it might seem like a win-win—Intel gets much-needed funding and the U.S. eventually makes bank on its investment. That’s certainly the way the White House and its supporters are touting it. And the agreement seemingly dovetails nicely with the president’s stated intention to support American companies and manufacture chips within the U.S.
But like most bailouts, this one is frowned upon by those who believe that declining companies like Intel should be left to die a natural death so other new, innovative companies can rise. And, as with all things Trump, the deal is not so simple and the potential for it to go south is significant.
First, the company needs more than what the government’s ponying up—by some estimates an additional tens of billions of dollars. Softbank said it will throw in a couple of billion dollars (that Softbank and the White House offered assistance at roughly the same time was a coincidence, according to Intel CFO David Zinser). And it is possible that the government’s investment will lure other investors.
If the past predicts the future, Trump may very well try to exert influence on Intel’s leadership or on the market. He could easily put his finger on the scale for Intel or insist that the business operate in a certain way—he did, for example call for the resignation of Intel CEO Lip-Bu Tan before an Oval Office meeting resulted in the equity investment deal—though both of those actions would certainly face considerable blowback.
And the company now says that because of the U.S. government’s involvement, its overseas business could feel the sting of increased regulatory strictures.
Intel warned that the deal might "limit potential future transactions that may be beneficial to stockholders" since as the largest stakeholder the federal government’s voting power over leadership and management may diminish that of other shareholders.
Perhaps there are some important lessons that can be learned from the General Motors bail out in 2009, when the government essentially took a 60.8% equity stake in GM under the Troubled Asset Relief Program. The architects of that deal set clear parameters and terms for the government’s role, including when and how control would shift back to the automaker. And the government sold its shares of GM slowly, bit by bit, to minimize disruption, making a complete exit by 2013. Hopefully a similar discipline will be applied here, though it is anybody’s guess whether this administration would follow agreed-upon rules.
As of Thursday night, the government had sent Intel $5.7 billion of its promised $9.9 billion investment, converted from grant money under CHIPS Act passed during the Biden administration. If successful, the deal could become a blueprint for future federal government investments in private companies. If it goes south, then it could become a cautionary tale of the highest order. Intel is worth saving. Whether this deal secures its future or shackles it will be the real test.
Note: TechChannels will continue to follow this story as it develops.