By Yohai Schwiger

After days of tense negotiations, Intel announced on Friday that the U.S. government will acquire a 9.9% stake in the company, valued at $8.9 billion. While Intel presented it as a fresh investment, the reality is more nuanced: no new money is coming in. Instead, grants already promised under the Biden administration—$5.7 billion from the CHIPS Act and $3.2 billion from the Secure Enclave program—are being converted into direct equity.

In effect, Trump rewrote the rules after the fact. Instead of receiving cash grants as originally intended, Intel was forced to accept government ownership. The deal is unprecedented: at the outset, no such equity requirement existed. The shares were issued at $20.47 apiece—below the current market price of $24.80—making the U.S. government Intel’s largest shareholder, ahead of major investors Vanguard and BlackRock.

Under the agreement, Washington holds no direct management rights but must vote in line with the board’s recommendations, with limited exceptions. That makes the government a “passive” shareholder in name, yet with potential to influence corporate decisions in the future.

Trump’s Victory

The deal is being cast as a personal triumph for President Donald Trump and another showcase of his negotiating prowess. Just last week, Trump publicly demanded that CEO Lip-Bu Tan—who only recently took the helm—resign, citing close ties with China and potential conflicts of interest. The demand weakened Tan’s standing and left him cornered in negotiations. The compromise: Tan keeps his job, but the U.S. becomes Intel’s dominant shareholder.

Trump wasted no time in claiming the win. “He walked in wanting to keep his job and he ended up giving us $10 billion for the United States. So we picked up $10 billion”, Trump said on Friday. The sarcastic tone turned the deal into not just a financial arrangement but also a political statement—reinforcing Trump as the ultimate victor and Intel as the subordinate.

Tan’s Defeat

For Tan, the episode is a major blow. He has been trying to drive a sweeping restructuring at Intel, with an emphasis on rebuilding the foundry business. But the public call for his resignation has shaken his authority inside and outside the company.

Recently, Tan unveiled a cost-cutting program alongside Intel’s Q2 earnings report and stressed a cautious approach to expanding production capacity in order to protect the company’s finances. He canceled projects in Europe and announced a pause in expanding Intel’s Ohio fabs—moves at odds with the administration’s stated goal of ramping up domestic manufacturing. Now, with Washington as Intel’s largest shareholder, the company may find itself pressured to resume the Ohio expansion to satisfy political demands. From here on, every quarterly report and strategic move will be scrutinized not only by investors and Intel’s board, but also by the U.S. government, now a de facto partner.

What It Means for Intel

Government backing brings obvious advantages: better odds of winning defense and federal contracts, regulatory favoritism, political support, and an image of stability that could attract more U.S. corporate customers. It also signals to Wall Street that Intel has a government safety net, potentially lowering its risk profile.

But the downside is real. Market watchers fear Washington may not remain a “passive” owner forever. Even a symbolic presence could evolve into real influence over strategy—blurring the line between corporate independence and state control.

The Death of the CHIPS Act as We Knew It

The Intel deal could set a precedent. If Washington can turn CHIPS Act grants into equity stakes, the same could happen to other companies—Micron, GlobalFoundries, even TSMC and Samsung’s U.S. operations. This fundamentally alters the nature of the CHIPS Act. What began as a straightforward subsidy program to incentivize semiconductor investment is morphing into a mechanism for government leverage, forcing companies to surrender ownership in exchange for support.

It’s worth remembering that Trump himself opposed the CHIPS Act when it was passed, calling it a waste of taxpayer money and vowing to repeal it. Instead of scrapping the law, he has reshaped it—transforming grants into equity stakes and turning the program into a direct instrument of ownership and control. For Intel and its peers, “free” money is no longer free.