U.S. government to invest $8.9 billion in Intel common stock

SANTA CLARA - The U.S. government will purchase a 9.9 percent stake in Intel Corporation (NASDAQ:INTC) for $8.9 billion, according to a statement released by the company on Friday. The investment comes as Intel, currently valued at $108 billion and trading at $24.80, aims to strengthen its position as a prominent player in the semiconductor industry. According to InvestingPro data, the company generated $53.07 billion in revenue over the last twelve months, despite facing profitability challenges.

Under the agreement, the government will acquire 433.3 million primary shares at $20.47 per share, funded by $5.7 billion in previously awarded but unpaid CHIPS Act grants and $3.2 billion from the Secure Enclave program. While Intel has faced recent challenges with profitability, InvestingPro analysts project a return to profitability in 2025, with an EPS forecast of $0.12. Get access to over 30 additional key insights and detailed analysis with InvestingPro’s comprehensive research report.

The investment represents a passive ownership stake with no board representation or special governance rights. The government will vote with Intel’s board on matters requiring shareholder approval, with limited exceptions.

"As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made," said Lip-Bu Tan, CEO of Intel.

Commerce Secretary Howard Lutnick stated, "Intel is excited to welcome the United States of America as a shareholder, helping to create the most advanced chips in the world."

The government will also receive a five-year warrant to purchase an additional five percent of Intel shares at $20 per share, exercisable only if Intel ceases to own at least 51 percent of its foundry business.

The agreement eliminates claw-back and profit-sharing provisions associated with $2.2 billion in previously dispersed CHIPS Act grants. Combined with those earlier funds, the total government investment in Intel now reaches $11.1 billion.

Intel is currently expanding its domestic chipmaking capacity with over $100 billion in investments across U.S. sites. The company’s newest chip fabrication facility in Arizona is expected to begin high-volume production later this year.

Several technology industry leaders, including Microsoft CEO Satya Nadella and Dell CEO Michael Dell, expressed support for the partnership between Intel and the government to strengthen domestic semiconductor manufacturing.

The announcement comes amid broader efforts by the Trump Administration to expand American technology and manufacturing leadership in the semiconductor industry.

In other recent news, Intel is actively seeking additional investors for an equity infusion at a discounted price, following a $2 billion capital injection from Japanese conglomerate SoftBank. This comes as the U.S. government considers converting its funding for Intel into an equity stake, with Commerce Secretary Lutnick emphasizing the desire for American-made semiconductors. Meanwhile, Truist Securities reiterated its Hold rating on Intel stock, maintaining a price target of $21, and noted that Intel’s challenges extend beyond financial resources despite recent capital support. UBS also maintained a Neutral rating with a $25 price target, suggesting that downside risk is likely protected by Intel’s tangible book value. These developments highlight ongoing efforts to stabilize the company amid broader industry challenges.

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