The Trump administration is reportedly in advanced discussions to acquire approximately a 10% equity stake in Intel Corp., a move that could establish the U.S. government as the beleaguered chipmaker’s largest shareholder. This potential investment is being considered through the conversion of some or all of Intel’s allocated grants from the US Chips and Science Act into equity. Intel is slated to receive a total of $10.9 billion in Chips Act grants, designated for both commercial and military production, an amount roughly sufficient to fund the targeted 10% holding. Based on Intel’s current market valuation, such a stake would be valued at roughly $10.5 billion. However, the precise size of the stake and whether the White House will proceed with the plan remain uncertain.

News of these potential government discussions initially sparked a rally in Intel’s shares, leading to their best weekly gain since February. However, shares experienced a dip, falling as much as 5.5% after Bloomberg reported on the ongoing talks. A White House spokesman, Kush Desai, refrained from commenting on specific discussions, emphasizing that no deal is official until publicly announced. Intel did not immediately respond to inquiries regarding the matter.

This potential investment aligns with a recent trend where the U.S. government, particularly under the Trump administration, is adopting a more assertive role in strategic sectors. This pattern was previously observed when the Defense Department took a $400 million preferred equity stake in MP Materials Corp., a U.S. rare-earth producer, making the Pentagon its largest shareholder. The White House has also explored the possibility of converting other Chips Act awards into equity stakes across various companies, though it is unclear if this broader idea has gained widespread traction or been formally discussed with other affected entities.

Despite the prospect of government support, Intel faces significant challenges, including stagnant sales, ongoing financial losses, and difficulties in regaining its technological leadership within the industry. New CEO Lip-Bu Tan is focused on reviving the company, primarily through strategic cost reductions and job cuts. Last week, CEO Tan met with President Trump at the White House, following earlier criticism from Trump concerning Tan’s past connections to China. After the meeting, President Trump publicly commended Intel’s chief, describing his story as “amazing.” Despite the prior criticisms, Tan is expected to retain his position.

Adding another layer to Intel’s financial landscape, SoftBank Group Corp. announced plans to purchase $2 billion worth of shares in the company. As for the Chips Act grants, they were originally designed for phased disbursement as Intel met negotiated project milestones. As of January, Intel had received $2.2 billion in grant disbursements. It remains unclear whether these past disbursements would be factored into a potential equity stake, if Intel has received additional tranches of its award, and on what timeline the company would receive future funds under such an arrangement.