The Trump administration is currently engaged in negotiations about potentially securing a 10% stake in Intel by utilizing some or all of the financial grants the company is set to receive through the Chips Act. Reports indicate that this investment would be valued at around $10 billion, corresponding to the total Intel is expected to receive in grants, which amounts to approximately $10.9 billion aimed at both commercial and military production.
Recent media reports hinted at the possibility of a government investment in Intel following a significant meeting between the company's CEO, Lip-Bu Tan, and President Donald Trump. This meeting was reportedly initiated by Trump's call for the resignation of the new Intel chief due to concerns about alleged connections with Chinese firms. Analysts suggest that government support could provide Intel with necessary leverage to improve its struggling foundry business; however, the company still faces considerable hurdles, including a weak lineup of products and difficulties attracting customers to its newly established factories.
Commenting on the situation, David Wagner, head of equity and portfolio management at Aptus Capital Advisors, noted that the government's intervention signifies a more severe competitive predicament for Intel than previously thought. While Wagner expressed skepticism about the wisdom of using taxpayer money to invest in private companies, he acknowledged that such an investment might be preferable to Intel becoming a state-controlled enterprise. Trump's approach to corporate intervention appears unprecedented, given the historical context in which the U.S. government has previously taken equity positions in troubled companies, such as during the financial crisis of 2007-2009 when it invested in General Motors.
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