WASHINGTON, D.C.: The U.S. government will take a nearly 10 percent equity stake in Intel, converting billions of dollars in federal grants into shares of the struggling chipmaker, President Donald Trump announced. 

The move marks Washington's latest direct intervention in corporate America as it seeks to shore up key industries.

Under the agreement, the government will purchase 433.3 million Intel shares for US$8.9 billion, or $20.47 apiece, about $4 below the closing price of $24.80. The stake, amounting to 9.9 percent of Intel, is being funded through $5.7 billion in unpaid grants from the Biden-era CHIPS Act and another $3.2 billion tied to the Secure Enclave program.

The deal ensures Intel will receive roughly $10 billion to help expand U.S. factories, a critical piece of Trump's push to revive domestic chipmaking. "He walked in wanting to keep his job, and he ended up giving us $10 billion for the United States," Trump said of Intel CEO Lip-Bu Tan after meeting him at the White House.

The agreement follows tense exchanges earlier this month, when Trump demanded Tan step down over his past investments in Chinese firms. Instead, Tan secured government backing, which Commerce Secretary Howard Lutnick described as "fair to Intel and fair to the American people."

Intel shares rose 5.5 percent in regular trading on August 22 and gained another one percent after hours.

The deal echoes other unusual arrangements under Trump's administration. Washington recently struck a revenue-sharing agreement with Nvidia, securing 15 percent of sales from some AI chips sold in China. It also became the largest shareholder in MP Materials, a rare-earth miner, and took a "golden share" with veto rights in the Nippon Steel–U.S. Steel takeover.

Analysts say the government's passive ownership—without a board seat but with limited voting rights—may buy Intel time to rebuild. A five-year warrant at $20 a share gives the U.S. the option to raise its stake by another five percent if Intel loses control of its foundry business.

Still, doubts linger over Intel's ability to recover. Once the cornerstone of U.S. chip dominance, it has ceded ground in processors to AMD and in AI to Nvidia. Its foundry business, intended to compete with Taiwan's TSMC, remains deeply loss-making. Intel posted an $18.8 billion loss in 2024, its worst since 1986.

SoftBank added a $2 billion investment earlier this week, but Synovus Trust's Daniel Morgan warned that "without government support or another financially stronger partner, it will be difficult for the Intel foundry unit to raise enough capital."