A new report says the U.S. could take a financial stake in Intel - what would be the government's biggest venture yet into private business for national-security reasons
Intel could get some help from the U.S. government, according to a new report.
What a difference a week makes.
After asking for Intel Corp. Chief Executive Lip-Bu Tan's resignation last week, President Donald Trump might be willing to swoop in and help the beaten-down chip maker, according to a new report - the biggest sign yet that the federal government is willing to take a new approach to shoring up U.S. national security in peacetime.
Bloomberg News reported Thursday that Trump is in conversations with the company over a potential U.S. government stake in Intel, citing multiple unnamed sources. An arrangement would help Intel move ahead with an Ohio factory project that's been besieged by delays.
Intel's stock (INTC) closed up 7.4% in Thursday's session and rose another 4.6% in after-hours action.
The company declined to comment on the report but shared that it's "deeply committed to supporting President Trump's efforts to strengthen U.S. technology and manufacturing leadership."
"Discussion about hypothetical deals should be regarded as speculation unless officially announced by the administration," White House spokesman Kush Desai said in a statement.
While Intel has lost some luster recently due to technological struggles, it has caught Trump's interest because of its strategic importance in the global trade landscape. Most U.S. companies outsource chip manufacturing, but Intel has the capacity to produce its own semiconductors domestically - and it's been trying to restart a business where it's a legitimate player in the manufacturing of chips for other companies as well.
In the view of CFRA analyst Angelo Zino, "the greater government participation, aimed at significantly boosting U.S. chip manufacturing, could seek to push and/or encourage U.S. fabless chipmakers to leverage [Intel's] U.S. facilities."
Given how much the global semiconductor supply chain is reliant on Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) (TW:2330), Intel has the potential to be a critical asset for the U.S. - if the company stays in the chip-making game. Intel signaled on its last earnings call that it would need a meaningful external customer to financially justify its next-generation process technology.
The report is another sign of Intel's rapidly evolving relationship with Washington. While Trump criticized Tan last week, citing his links to Chinese entities, the two appeared to make nice at a Monday meeting. Trump shared that he and Tan had a "very interesting" meeting and relayed that the CEO would be talking with members of his cabinet about the path forward.
Trump has increasingly gotten the U.S. involved in private-sector companies, announcing a deal to take a $400 million stake in MP Materials Corp. (MP) in July via a preferred-equity arrangement. With U.S. Steel, he approved the company's merger with Japan's Nippon Steel Corp. (JP:5401) (NPSCY) while getting the U.S. a "golden share" in the company, which will let the president block matters like the offshoring of jobs or a relocation of U.S. Steel's Pittsburgh headquarters.
He's also intervened with Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD), allowing the companies to again sell in China if they agreed to give the U.S. government 15% of the associated revenue.
But any Intel move would likely be an order of magnitude greater, given Intel's roughly $100 billion market capitalization. During the financial crisis, the U.S. government bailed out AIG Inc. (AIG) and General Motors Co. (GM), taking stakes in those businesses that it ultimately sold.
-Emily Bary
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