Street Calls of the Week
Investing.com -- {{251|{{251|{{251|{{251|{{251|{{251|{{251|{{251|{{251|Intel}}}}}}}}}}}}}}}} (NASDAQ:INTC)}} shares added to gains on Friday following a Bloomberg report that the Trump administration is discussing the possibility of the U.S. government taking a stake in the chipmaker.
The stock closed Thursday up 7.4% at $23.86 and gained another 3.6% in morning trading on Friday.
According to people familiar with the matter, the potential investment would help support {{251|Intel’s}} efforts to expand domestic semiconductor manufacturing, particularly its repeatedly delayed factory hub in Ohio. The company had previously announced plans to make the Ohio site the world’s largest chipmaking facility.
The discussions reportedly stem from a meeting this week between President Donald Trump and Intel CEO Lip-Bu Tan after the President called Tan "conflicted" over his ties to China.
The reported talks come as Intel has faced significant challenges in recent years, including manufacturing delays and increased competition in the semiconductor market. The company has been working to revitalize its manufacturing capabilities and regain technological leadership.
The potential government investment would align with broader US efforts to strengthen domestic semiconductor production amid concerns about supply chain security and technological competition with China.
In a follow-up report, Bloomberg said the U.S. is considering using the U.S. Chip Act funds to acquire the stake.
Options being reviewed include converting some or all of Intel’s current Chips Act grants into equity, providing new money from the broader funding pool, or pairing Chips Act funds with other financing sources. Intel has already secured $7.9 billion in grants for commercial semiconductor manufacturing and up to $3 billion for the Pentagon’s Secure Enclave program, along with access to as much as $11 billion in loans under the 2022 law.
Talks between the U.S. and Intel are said to be fluid.
Despite the bump higher in the stock, some Wall Street analysts remain skeptical.
Mizuho TMT Specialist, Jordan Klein, said he would avoid buying the headlines, although he also doesn’t recommend adding to shorts.
Klein highlights that the speculation is that Trump aims to push major U.S. chipmakers to shift leading-edge orders from {{32306|TSM}} to Intel, despite Intel lagging TSM’s technology. By tying Chips Act funding to accelerating Intel’s delayed Ohio fab project, Trump could score political points in a swing state and pressure U.S. customers to use Intel over TSM. However, the real challenge is Intel’s lack of competitive tech, not money, and some see a better outcome in splitting off Intel’s manufacturing arm for targeted government support.
"They have no customers and there is a good reason for that," Klein said. "Just ask these customers."
(Additional reporting by Vahid Karaahmetovic and Frank DeMatteo)