The Trump administration is exploring a plan to acquire approximately 10% of Intel's (INTC.US) shares using funds from the CHIPS and Science Act, a move that could make the U.S. government the largest shareholder of the struggling chipmaker. According to White House officials and informed sources, the federal government is considering converting the originally phased CHIPS Act funding into equity investments, potentially covering the $10.9 billion in commercial and military production subsidies already approved for Intel. However, as the Trump administration deliberates, Japan's SoftBank has already made its move—a $2 billion investment deal is finalized.

At current market valuations, a 10% stake would be worth approximately $10.5 billion, partially overlapping with the $2.2 billion in initial grants Intel has already received. Specific operational details and timelines remain unclear. White House spokesperson Kush Desai declined to comment on negotiation specifics, emphasizing only that "no agreement is final until officially announced." The U.S. Department of Commerce, which oversees the CHIPS Act, also declined to comment, and Intel did not respond to requests for comment.

Informed sources added that the government is also discussing the possibility of converting other CHIPS Act awards into equity, though it remains uncertain whether this idea has broad support or has been communicated to companies in advance. Notably, CHIPS Act funds were originally planned to be disbursed in phases based on project milestones, but converting them into equity could accelerate the funding timeline.

The negotiations unfold against a complex backdrop: Since the Trump administration took office, Intel, which has fallen technologically behind Asian manufacturers like TSMC (TSM.US), has become a key focus for reviving domestic chip manufacturing in the U.S. Although TSMC and Samsung have expanded their U.S. investments, ensuring domestic production of cutting-edge chips remains a priority for both administrations.

The Biden administration previously explored options such as a merger between Intel and GlobalFoundries (GFS.US), while the Trump team discussed with TSMC the possibility of taking over Intel's factories, though no substantial progress was made. Internally, there were also proposals to bring in capital from the UAE, but their current status is unclear.

If the equity acquisition plan proceeds, it would align with the Trump administration's recent pattern of increasing intervention in strategic sectors. The team has already strengthened control by requiring semiconductor companies to share 15% of sales to China and acquiring a "golden share" in U.S. Steel.

This approach echoes the Pentagon's announcement last month of acquiring a 15% preferred stake in rare earth company MP Materials, highlighting Washington's inclination toward capital deployment in critical supply chains.

Notably, as the Trump administration considers investing in Intel, Japan's SoftBank Group has already reached an agreement to inject $2 billion into the U.S. chipmaker. Under the terms of the final securities purchase agreement, SoftBank will directly acquire Intel common stock at $23 per share, subject to customary closing conditions.

SoftBank Chairman and CEO Masayoshi Son stated that this investment reflects the company's "commitment to advancing U.S. technology and manufacturing leadership." Intel CEO Pat Gelsinger emphasized his decades-long close collaboration with Son and expressed gratitude for the confidence shown in Intel through this investment.

Currently, Intel faces dual pressures of stagnant sales and ongoing losses, with newly appointed CEO Pat Gelsinger attempting to reverse the decline through cost-cutting and layoffs. Although news of the government investment previously drove Intel's stock to its largest weekly gain since February, reports of equity negotiations caused its shares to drop over 3% on Monday. However, following SoftBank's announcement of the $2 billion investment deal, Intel's after-hours stock price rose over 5% at the time of writing.