NEW YORK\u00a0\u2014\u00a0President Donald Trump on Friday announced the U.S. government has secured a 10% stake in struggling Silicon Valley pioneer Intel in a deal that was completed just a couple weeks after he was depicting the company\u2019s CEO as a conflicted leader unfit for the job.<\/p>\n
\u201cThe United States of America now fully owns and controls 10% of INTEL, a Great American Company that has an even more incredible future,\u201d Trump wrote in a post.<\/a><\/p>\n The U.S. government is getting the stake through the conversion of $11.1 billion in previously issued funds and pledges. All told, the government is getting 433.3 million shares of non-voting stock priced at $20.47 apiece \u2014 a discount from Friday\u2019s closing price at $24.80. <\/p>\n That spread means the U.S. government already has a gain of $1.9 billion, on paper. The remarkable turn of events makes the U.S. government one of Intel\u2019s largest shareholders at a time that the Santa Clara, California, company is in the process of jettisoning more than 20,000 workers<\/a> as part of its latest attempt to bounce back from years of missteps taken under a variety of CEOs.<\/p>\n Intel\u2019s current CEO, Lip-Bu Tan, has only been on the job for slightly more than five months,<\/a> and earlier this month, it looked like he might be on shaky ground already after some lawmakers raised national security concerns about his past investments in Chinese companies while he was a venture capitalist. <\/p>\n Trump latched on to those concerns in an August 7 post<\/a> demanding that Tan resign.<\/p>\n But Trump backed off after the Malaysian-born Tan professed his allegiance to the U.S. in a public letter<\/a> to Intel employees and went to the White House to meet with the president, leading to a deal that now has the U.S. government betting that the company is on the comeback trail after losing more than $22 billion since the end of 2023. <\/p>\n Trump hailed Tan as \u201chighly respected\u201d CEO in his Friday post. In a statement, Tan applauded Trump for \u201cdriving historic investments in a vital industry\u201d and resolved to reward his faith in Intel. <\/p>\n \u201cWe are grateful for the confidence the President and the Administration have placed in Intel, and we look forward to working to advance U.S. technology and manufacturing leadership,\u201d Tan said.<\/p>\n Intel\u2019s current stock price is just slightly above where it was when Tan was hired in March and more than 60% below its peak reached 25 years ago when its chips were still dominating the personal computer boom before being undercut by a shift to smartphones a few years later. <\/p>\n The company\u2019s market value currently stands at about $108 billion – a fraction of the current chip kingpin, Nvidia, which is valued at $4.3 trillion. The stake is coming primarily through U.S. government grants to Intel through the CHIPS and Science Act<\/a> that was started under President Joe Biden\u2019s administration as a way to foster more domestic manufacturing of computer chips to lessen the dependence on overseas factories.<\/p>\n But the Trump administration, which has regularly pilloried the policies of the Biden administration, saw the CHIPs act as a needless giveaway and is now hoping to make a profit off the funding that had been pledged to Intel.<\/p>\n \u201cWe think America should get the benefit of the bargain,\u201d U.S. Commerce Secretary Howard Lutnick said earlier this week. \u201cIt\u2019s obvious that it\u2019s the right move to make.\u201dAbout $7.8 billion had been been pledged to Intel under the incentives program, but only $2.2 billion had been funded so far. Another $3.2 billion of the government investment is coming through the funds from another program called \u201cSecure Enclave.\u201d<\/p>\n Although the U.S. government can\u2019t vote with its shares and won\u2019t have a seat on Intel\u2019s board of directors, critics of the deal view it as a troubling cross-pollination between the public and private sectors that could hurt the tech industry in a variety of ways.<\/p>\n For instance, more tech companies may feel pressured to buy potentially inferior chips from Intel to curry favor with Trump at a time that he is already waging a trade war that threatens to affect their products in a potential scenario cited by Scott Lincicome, vice president of general economics for the Cato Institute.<\/p>\n