The Trump administration is converting Intel's CHIPS Act grants into a government equity stake, with Commerce Secretary Howard Lutnick confirming the unprecedented move that transforms Biden-era subsidies into partial ownership of America's struggling chipmaker. Industry experts warn the deal could backfire as 'reverse privatization.'
The Trump administration just turned semiconductor subsidies into a government takeover. Commerce Secretary Howard Lutnick confirmed to CNBC that the government will take an equity stake in Intel in exchange for grants already committed under Biden's CHIPS Act - a move that transforms traditional subsidies into partial government ownership of America's flagship chipmaker.
"We should get an equity stake for our money, so we'll deliver the money which was already committed under the Biden administration," Lutnick declared. "We'll get equity in return for it." According to The New York Times, the administration has been discussing a 10 percent stake in the $101 billion company.
The announcement sent shockwaves through Silicon Valley, where government equity stakes in major tech companies remain virtually unprecedented. Intel has already received $2.2 billion of up to $7.86 billion promised under the 2022 CHIPS Act, with payments tied to fabrication milestones. Now Trump wants ownership in exchange.
"It's not the right policy to have the US government own things, to have privatization in reverse," warns Stephen Moore, a Heritage Foundation fellow and former Trump economic adviser, speaking to WIRED. "That's similar to Europe's industrial model, and we haven't done that often here in the US, because a lot of it ends up failing."
The timing is critical for Intel, which has burned through over $107.5 billion in capital expenditures and $78.8 billion in R&D over five years while losing ground to competitors like TSMC and NVIDIA. The company's stock has plummeted from its early 2000s peak, though SoftBank's recent $2 billion investment provided a brief boost.
Moore points to historical precedents that should worry investors. The 1980s Synthetic Fuels Corporation, hailed by President Carter as "the cornerstone of our energy policy," collapsed by 1986 after burning through billions in federal investment. More recent government interventions during the 2008 financial crisis were structured as loans and asset purchases, many eventually repaid.
This Intel deal goes further than traditional bailouts. The Trump administration already approved a controversial "golden share" arrangement with Nippon Steel and US Steel, giving government veto power over corporate decisions including board appointments and relocations. Lutnick claims the Intel stake won't include voting rights, but skeptics question how long that restriction will last.
"Intel is deeply committed to supporting President Trump's efforts to strengthen US technology and manufacturing leadership," Intel spokesperson Cory Pforzheimer told WIRED, carefully avoiding specifics about the equity arrangement.
The deal comes amid leadership turmoil at Intel. CEO Pat Gelsinger retired in December after struggling to reverse the company's decline, replaced by Lip-Bu Tan from Cadence Design Systems. Then Trump demanded Tan's resignation over alleged China ties, only to meet with the CEO a week later and begin praising his leadership.
Semiconductor analyst Patrick Moorhead of Moor Insights & Strategy sees short-term benefits but questions the long-term strategy. "It means Intel gets its cash without a bunch of strings attached," he told WIRED. But he warns that even massive government investment won't solve Intel's core problem: securing major customers while competing against TSMC's Taiwan-based R&D advantages.
The arrangement raises uncomfortable questions about government influence over corporate strategy. While Lutnick insists there will be no operational control, precedent suggests mission creep is inevitable when taxpayers become shareholders. The Department of Defense already took equity stakes in rare-earth company MP Materials to reduce China dependence, showing how national security justifications enable government ownership.
"It's more political theater than anything else," Moorhead concluded. "I think what it accomplishes is it gives the Trump administration the ability to say, 'What Biden did was a giveaway, and I'm making deals.'"
Trump's Intel equity play represents a fundamental shift from subsidies to government ownership in critical technologies. While supporters argue it protects national security and taxpayer interests, critics see dangerous precedent toward state capitalism that could undermine innovation and private investment. With Intel's future hanging in the balance and China competition intensifying, this unprecedented experiment in government-tech partnership will either secure American semiconductor leadership or demonstrate why Washington shouldn't pick winners in Silicon Valley.
