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TMTPOST -- U.S. President Donald Trump could tap into a legislation aimed at boosting American semiconductor industry to fund his aggressive efforts bail Intel Corporation out.
Credit：China Central Television
The Trump administration is considering using at least part of funds from the CHIPS and Science Act of 2022 (CHIPS Act) for Intel in exchange for a stake in the 57-year old chipmaker, Bloomberg on Friday cited people familiar with the matter. It was said that the government』s talks were still in early stages and other options could be under consideration.
The report indicated possible options include converting some or all of Intel』s existing CHIPS Act grants into equity, allocating new funding from a broader pool, and combining Chips Act money with other financing streams. It noted that the source of funding remains in discussion, hinting the administration may eventually decide to take advantage of other sources.
The government is seeking to quickly deploy dormant CHIPS Act funding to sectors it considers critical to U.S. national security, per the report.
Signed into law in August 2022, the CHIPS Act allocated $53 billion in federal incentives for domestic semiconductor manufacturing and research and development (R&D), of which $39 billion is set aside for a financial assistance program—also called the CHIPS for America Fund—administered by the U.S. Department of Commerce to build new and expand existing semiconductor facilities. Companies are also eligible for a 25% tax credit.
While U.S. and foreign companies with facilities in the United States are eligible for the CHIPS Act, Intel was already deemed as the biggest beneficiary of the federal incentives. The company under the act was awarded $7.9 billion in grants for commercial semiconductor manufacturing and as much as an additional $3 billion for the Pentagon』s Secure Enclave program. It also has an option to draw an $11 billion loan under the act.
The White House, Commerce Department and Intel didn』t comment on the report, but investors seemed welcomed the news since Intel shares rose as much as 7.5% at midday. The stock closed 2.9% higher, bringing the rally following reported possible U.S. government stake in to 10.5%.
The Trump administration on Thursday was reported to be in talks with Intel to have the U.S. government take a stake in the company, and the deal, if reached, would help re-boost Intel』s long-delayed factory hub in Ohio.
Neither Intel nor the Trump administration confirmed these reports. "We look forward to continuing our work with the Trump administration to advance these shared priorities, but we are not going to comment on rumors or speculation," an Intel representative said in a statement.
The spokesperson repeated the pledge Intel made last week, saying the company is 「deeply committed to supporting President Trump』s efforts to strengthen U.S. technology and manufacturing leadership.」
「Discussion about hypothetical deals should be regarded as speculation unless officially announced by the Administration,」 White House spokesman Kush Desai said in a statement.
Government intervention in Intel is 「essential」 to protect U.S. national security, tech analyst Gil Luria said in a CNBC interview on Friday .「We』re all capitalists,」 said Luria, head of technology research at D.A. Davidson 「We don』t want government to intervene and own private enterprise, but this is national security.」
But Paul Argenti, professor of management and corporate communication at the Tuck School of Business at Dartmouth College, cautioned the risks from the potential government capital injection.
「It』s tricky to think about how this could work, and it is unprecedented in terms of the marriage of politics and private enterprise」 said Argenti. 「Semiconductors are a really strategic asset, there』s no question about that,」 he added. 「But government as a shareholder brings real governance risks.」
