WASHINGTON (AP) 鈥� President Donald Trump said that Intel has agreed to give the U.S. government a 10% stake in its business.
Speaking with reporters on Friday, Trump said the deal came out of a meeting last week with Intel CEO Lip Bu Tan 鈥� which came days after the president called for Tan to resign over his past ties to China.
鈥淚 said, I think it would be good having the United States as your partner,鈥� Trump said. 鈥淗e agreed, and they鈥檝e agreed to do it.鈥�
The official announcement is expected to come later Friday, according to a White House official who was not authorized to speak publicly ahead of an announcement and spoke on condition of anonymity.
In July, Intel said it was slowing construction of its $28-billion project in New Albany, and planning to reduce its worldwide workforce by 15%.
The Trump administration has been in talks to secure a 10% stake in Intel in exchange for converting government grants that were pledged to Intel under President Joe Biden. If the deal is completed, the U.S. government would become one of Intel鈥檚 largest shareholders and blur the traditional lines separating the public sector and private sector in a country that remains the world鈥檚 largest economy.
In his second term, Trump has been leveraging his power to reprogram the operations of major computer chip companies. The administration is requiring Nvidia and Advanced Micro Devices, two companies whose chips are helping to power the craze around artificial intelligence, to pay a 15% commission on their sales of chips in China in exchange for export licenses.
Trump鈥檚 interest in Intel is also being driven by his desire to boost chip production in the U.S., which has been a focal point of the trade war that he has been waging throughout the world. By lessening the country鈥檚 dependence on chips manufactured overseas, the president believes the U.S. will be better positioned to maintain its technological lead on China in the race to create artificial intelligence.
That鈥檚 what the president said August 7 for Intel CEO Lip-Bu Tan to resign less than five months after the Santa Clara, California, company . The demand was triggered by reports raising national security concerns about Tan鈥檚 past investments in Chinese tech companies while he was a venture capitalist. But Trump backed off after Tan professed his allegiance to the U.S. to Intel employees and went to the White House to meet with the president, who applauded the Intel CEO for having an 鈥渁mazing story.鈥�
The company isn鈥檛 commenting about the possibility of the U.S. government becoming a major shareholder, but Intel may have little choice because it is currently dealing from a position of weakness. After enjoying decades of growth while its processors powered the personal computer boom, the company fell into a slump after missing the shift to the mobile computing era unleashed by the iPhone鈥檚 2007 debut.
Intel has fallen even farther behind in recent years during an artificial intelligence craze that has been a boon for Nvidia and AMD. The company lost nearly $19 billion last year and another $3.7 billion in the first six months of this year, prompting Tan to undertake a cost-cutting spree. By the end of this year, Tan , a 25% reduction from the end of last year.
Although rare, it鈥檚 not unprecedented for the U.S. government to become a significant shareholder in a prominent company. One of the most notable instances occurred during the Great Recession in 2008 when the government injected nearly $50 billion into General Motors in return for a roughly 60% stake in the automaker at a time it was on the verge of bankruptcy. The government ended up with a roughly $10 billion loss after it sold its stock in GM.
U.S. Commerce Secretary Howard Lutnick told CNBC during a Tuesday interview that the government has no intention of meddling in Intel鈥檚 business, and will have its hands tied by holding non-voting shares in the company. But some analysts wonder if the Trump administration鈥檚 financial ties to Intel might prod more companies looking to curry favor with the president to increase their orders for the company鈥檚 chips.
Intel was among the biggest beneficiaries of the Biden administration鈥檚 , but it hasn鈥檛 been able to revive its fortunes while falling behind on construction projects spawned by the program.
The company has received about $2.2 billion of the $7.8 billion pledged under the incentives program 鈥� money that Lutnick derided as a 鈥済iveaway鈥� that would better serve U.S. taxpayers if it鈥檚 turned into Intel stock.