Every reporter Lan Suying, Zheng Yuhang, every editor Wang Jiaqi
US$8.9 billion, accounting for 9.9% of the shares! On August 22, the U.S. government announced that it would become the largest shareholder of chip giant Intel.
This is not an ordinary corporate bail-out, let alone a simple financial allocation. Managed by the Trump administration, this deal subverted the traditional relationship between the U.S. government and private enterprises, turning subsidies under the Chip and Science Act into direct equity investments at the national level.
This “American version mix” initiative has been interpreted as the beginning of the U.S. establishment of a sovereign wealth fund, and could thus open up an era of state-capital-driven industries.
Exchange "promise fulfillment" for equity
According to Intel Corporation's announcement on August 22, the U.S. government will acquire 433.3 million shares of Intel common stock at a price of US$20.47 per share, accounting for 9.9%. The purchase price is nearly 17% discounted to Intel's closing price of US$24.80 on the day of the announcement. Coupled with the US$2.2 billion in subsidies Intel has received previously, the U.S. government's total investment in Intel reaches US$11.1 billion. After the transaction is completed, the U.S. government will become Intel's largest shareholder.
In addition to this, the U.S. government will also get a five-year holding license.If Intel’s stake in its chip generation plant drops to less than 51% the U.S. government has the right to purchase an additional 5% of Intel’s stake at a price of $20 per share.
To understand the nature of this deal, it is necessary to know where it is funded.
According to a statement issued by Intel, the U.S. government's funding sources are the $5.7 billion subsidy promised to Intel by the Biden administration when it passed the Chip and Science Act in 2022 but has not yet paid, and another $3.2 billion in government-funded project funds. In other words, these funds were originally planned by the U.S. government to give Intel, but the Trump administration "exchanged" them in the form of equity.
Behind this deal, it is also full of drama.
This also starts with Trump's relationship with Intel CEO Lip-Bu Tan.
On August 7, Trump posted an article on the "Real Social" platform, publicly shouting that Chen Liwu, who had been in office for less than half a year, would immediately resign. However, just four days later, relations between the two sides gradually warmed up. After meeting with Chen Liwu, Trump said Chen Liwu's "success and rise is a wonderful story." Eleven days later, the two parties officially announced the deal.
U.S. Trade Secretary Howard Lutnik said on August 22 that national security was the key motivation for the acquisition of Intel shares, while White House economic adviser Kevin Hasite said the move was part of the U.S. government’s overall strategy.
Intel is the only semiconductor company conducting research and development and manufacturing of cutting-edge logic process nodes in the United States, making it a strategic asset.
In an era of high reliance on Asian chip manufacturing, especially in the context of the global AI competition, the chip becomes a new generation of intelligent weapons "brain", it is crucial to ensure that the domestic has advanced process manufacturing capabilities.
However, behind the grand narrative of national security is the harsh reality of Intel's own struggles to survive. In the AI track, Intel is far behind Nvidia; in the core business CPU (Central Processor) field, it also continues to be encroached by AMD. According to the financial report, Intel recorded a huge loss of $18.80 billion in 2024, the first time since 1986, and the company's share price fell by 60% for the whole year.
U.S. builds sovereign wealth fund
Entering Intel is just the tip of the U.S. government’s iceberg.
Hassett made it clear in an interview with the media on August 25th that this move is part of a broader strategy to create a U.S. sovereign wealth fund.
In early February this year, Trump signed an executive order clarifying plans to establish a sovereign wealth fund.
According to the report, the strategic purpose of the U.S. Sovereign Wealth Fund is to reduce the U.S. equity leverage, shape the U.S. political new order and serve Trump's "American priority" policy. Sovereign wealth funds can leverage U.S. natural resources, mineral rights and strategic assets, attract private capital to invest in U.S. assets, increase asset liquidity, and reduce the dependence of the U.S. government on direct debt. The future U.S. "national team" funds may mainly come from the securitisation and privatization of U.S. state-owned assets.
The U.S. government owns roughly $1300 billion in real estate, factory and equipment assets, but only a fraction can be securized or privatized. For example, the U.S. government can integrate the holdings of real estate and real estate equities into sovereign wealth funds. The S&P predicts that if the Trump administration is strongly pushed forward, the fund is likely to finance more than $500 billion during Trump’s term.
Wang Shiyu, a senior investment banker in China and senior researcher at Taihe Think Tank, told the reporter of "Economic Daily" that the United States had not established sovereign wealth funds before, mainly because the United States was completely dominated by private capital in the past. However, Trump is accustomed to dominating the country's operations with business thinking, which is significantly different from the governing style of traditional American political elites in the past. This model of operating the country with a business mindset requires improving direct control over core economic resources and regulatory tools. It is not difficult for the United States to raise sovereign wealth funds, and I believe that many LP (limited partners) will submit "names".
From the investment direction, the U.S. sovereign wealth fund in the future or increase control of strategic assets, its investment may be used to acquire overseas ports, energy, rare-earth and other strategic resources, but also may invest in artificial intelligence, quantum computing and other high-tech circuits closely related to national security.
Change of U.S. Government Role
One of the core changes in the deal with Intel is the shift of the U.S. government's role from a "subsidy" to an "investor."
Over the past few decades, the U.S. government’s support for industrial development has been mainly within the framework of grants, loans or tax credits, and has basically not referred to corporate equity. For example, the Sematech Alliance, established in the 1980s to promote the development of the semiconductor industry, is a typical case where the U.S. government has provided it with approximately $500 million in grants for five years through the U.S. Defense Advanced Research Program, with no exchange of equity involved.
Incorporating Intel, completely breaking this practice, the Trump administration turned the Chip and Science Act subsidies into investments.
Wang said to the reporter of the Daily Economic News that the government holdings and market operations are not the first in the United States, and from the global practice, Singapore's Daimler Group is the most successful case in this model, its establishment for decades has alwaysined this operating mechanism and achieved remarkable results.
He believes that the United States, as a country with a high degree of marketization, theoretically has the ability to promote government investment or holdings and take into account market operations; and, Trump himself has an entrepreneurial background, compared to traditional politicians, he understands the relationship between government holdings and market operations.
However, such a change in role has caused great controversy in the United States.
Economist Michael R. Strange of the American Institute of Enterprise called Trump’s approach a “speculative corporate ‘chantage’ show” and warned that it would pose significant risks to and the long-term prosperity of the United States.
Some experts believe that the deal with Intel represents another break from the routine for Trump to extend presidential power to the business community-and probably not the last time. Hassett said on August 25 that the federal government may take stakes in other U.S. semiconductor companies and even enter other industries.
Jeffrey Galtz, senior researcher at the New American Security Center, said in an interview with the media: “The Trump administration is trying to expand the boundaries of U.S. government intervention in the private sector and is constantly testing the boundaries.”
Kentucky Republican Congressman Thomas Massey said in a statement to the media: “Nothing in the Chip and Science Act authorizes the U.S. government to buy Intel shares.
In fact, the U.S. government is also accelerating a similar role shift in other key areas.
Last month, the U.S. Department of Defense announced that it had spent US$400 million to acquire a stake in rare earth miner MP Materials, becoming the company's largest shareholder, with a 15% stake. MP Materials currently operates the only rare earth mine in the United States. Rare earths are mainly used to make magnets, which are core components of new energy vehicles, wind turbines and various advanced weapons and equipment.
In Japan's Nippon Steel's acquisition of US Steel in June, the US government also won itself "golden shares" with specific veto powers.
When asked whether the investment in Intel represented a new way of implementing industrial policies, Trump gave a positive answer on August 25 and said he "will try as much as possible." This means that the U.S. government's industrial intervention model is accelerating from a "case-by-case pilot" to an "institutional transformation."