Government inside

Four hundred and thirty-three million shares at $20.47 apiece. That is the price, set out by Intel on 22 August, at which the American government becomes the biggest shareholder in its most storied chipmaker.^{1IntelIntel and Trump Administration Reach Historic Agreement to Accelerate American Technology and Manufacturing Leadership22 Aug 2025} The $8.9bn buys about 9.9% of the company. Washington is not writing a new cheque. The money is $5.7bn of CHIPS Act grants that had been awarded but not paid, plus $3.2bn from the Secure Enclave programme, which pays Intel to make trusted chips for the Pentagon. Add the $2.2bn in grants already received and the state has put $11.1bn into Intel.^{1IntelIntel and Trump Administration Reach Historic Agreement to Accelerate American Technology and Manufacturing Leadership22 Aug 2025}

President Donald Trump presented the deal as a partnership. “I said, I think it would be good having the United States as your partner,” he told reporters, and Lip-Bu Tan, Intel’s boss, “agreed”.^{2AP, via OPBIntel agrees to give US government $8.9B stake in its company22 Aug 2025} Senator Ron Wyden of Oregon, where Intel employs about 18,000 people, called it “corporate extortion”.^{2AP, via OPBIntel agrees to give US government $8.9B stake in its company22 Aug 2025} Each man is describing a different part of the same animal.

• Revenue
• Net income

Shrinking giant. Intel, GAAP, $bn

	Revenue	Net income
2021	79	19.9
2022	63.1	8
2023	54.2	1.7
2024	53.1	-18.8

Source: Intel earnings releases³⁴

Intel needs help, and that is not in dispute. Revenue has fallen from $79bn in 2021 to $53.1bn in 2024,^{3Intel (SEC filing)Intel Reports Fourth-Quarter and Full-Year 2024 Financial Results30 Jan 2025,4Intel (SEC filing)Intel Reports Fourth-Quarter and Full-Year 2022 Financial Results26 Jan 2023} when the firm lost $18.8bn.^{3Intel (SEC filing)Intel Reports Fourth-Quarter and Full-Year 2024 Financial Results30 Jan 2025} It lost another $3.7bn in the first half of 2025, according to the AP, and is cutting its workforce by about a quarter.^{2AP, via OPBIntel agrees to give US government $8.9B stake in its company22 Aug 2025} Its market value is just over $100bn.^{2AP, via OPBIntel agrees to give US government $8.9B stake in its company22 Aug 2025} Intel describes itself as the only company doing both leading-edge logic research and manufacturing in America.^{1IntelIntel and Trump Administration Reach Historic Agreement to Accelerate American Technology and Manufacturing Leadership22 Aug 2025} If its fabs go, much of the point of the CHIPS Act goes with them.

The best case for the deal is simple and has some force. When taxpayers fund a risky turnaround they should share the upside, not just the losses. A grant is a gift; a share can be sold at a profit. The terms are also milder than they might have been. The stake is passive, with no board seat and no information rights. The government agrees to vote with Intel’s board on most matters.^{1IntelIntel and Trump Administration Reach Historic Agreement to Accelerate American Technology and Manufacturing Leadership22 Aug 2025} Howard Lutnick, the commerce secretary, has said Washington has no intention of meddling.^{2AP, via OPBIntel agrees to give US government $8.9B stake in its company22 Aug 2025}

We are not persuaded, for three reasons, and the first is in the small print. Washington also gets a five-year warrant to buy another 5% at $20 a share, which it can use only if Intel stops owning at least 51% of its foundry business.^{1IntelIntel and Trump Administration Reach Historic Agreement to Accelerate American Technology and Manufacturing Leadership22 Aug 2025} That is a poison pill pointed at one strategy: spinning off or selling control of the factories. Plenty of investors think a separate foundry, free to court Apple or Nvidia without the suspicion that it favours its parent, is Intel’s best hope. Policy has now put a price on that option, and the government that set the price is also the one judging whether it is in the national interest.

The second is that a promise to vote with the board protects whoever runs Intel today. Shareholders who want a change of strategy now face a 10% bloc that has pledged to side with management. Passive ownership, done this way, is not neutral. It entrenches.

The third is what it does to everyone else. Intel competes with foreign chipmakers that are building fabs in America, many of them with CHIPS money. Their regulator, their export licensor and sometimes their customer is now also a big owner of their rival. Any later decision on licences, tariffs or defence contracts that helps Intel will look like the government talking its own book, whether it is or not. That is bad for investment in American fabs, which was the purpose of the whole programme.

History offers a model, and a warning. The government put nearly $50bn into General Motors in 2008 for a stake of about 60%, the AP notes, and lost roughly $10bn.^{2AP, via OPBIntel agrees to give US government $8.9B stake in its company22 Aug 2025} The lesson is that a rescue stake is far easier to defend when everyone knows it will end.

So here is what should happen. Congress, which wrote the CHIPS Act as a grant programme rather than a sovereign-wealth fund, should require the Commerce Department to publish a timetable for selling the Intel shares, starting once the company returns to profit. The foundry warrant should be dropped, leaving Intel’s board free to choose its own structure. And the administration should say plainly that it will not convert other firms’ CHIPS awards into equity; a subsidy that turns into a shareholding on the president’s whim is not a programme that serious investors can plan around.

Intel’s old slogan put the brand inside every computer. It should not now need the government inside the brand.