Chips Act Funds Considered for Federal Stake in Intel

The U.S. government is exploring the use of CHIPS and Science Act funds to take an equity position in Intel (NASDAQ: INTC), according to people familiar with the matter. The Trump administration is reviewing whether a portion of the existing grants could be converted into ownership or whether additional capital could be provided through a new investment structure. While officials stress that discussions are preliminary, the idea of direct government participation in America’s largest chipmaker would mark a significant shift in industrial policy.

Intel’s stock reacted immediately, rising between 4% and 7% as traders speculated that such a move could strengthen its balance sheet and speed progress on its delayed Ohio manufacturing project. For a company working to regain technological leadership and stabilize cash flow, the possibility of government backing has sparked renewed investor interest.

Strategic Motives Behind the Move

Washington’s interest is tied to national security and the push to secure semiconductor supply chains. Intel remains the only U.S.-based company capable of manufacturing advanced chips at scale, and reducing reliance on overseas foundries such as Taiwan’s TSMC and South Korea’s Samsung has become a priority. A government stake could allow policymakers to influence Intel’s production priorities, steering more domestic orders toward U.S. facilities.

Supporters argue that state involvement would encourage leading American fabless companies — including Nvidia, AMD, Qualcomm, Apple, and Broadcom — to use Intel’s capacity instead of foreign alternatives. The administration is also weighing tariffs of up to 300% on imported chips, a move that would significantly alter cost structures and further incentivize reshoring. If enacted, these measures would represent one of the most aggressive attempts in decades to reshape the global semiconductor trade.

Operational and Financial Hurdles

Despite the political momentum, Intel’s operational challenges are substantial. Its advanced 18A process node has not yet secured significant external customers, and analysts forecast negative free cash flow of around $7 billion this year. CEO Lip-Bu Tan has stated that further investment in next-generation nodes will depend on firm client commitments, signaling a cautious approach to capital spending.

The Ohio mega-fab, promoted as a cornerstone of U.S. chip independence, has suffered repeated delays. Critics warn that additional funding may not resolve execution problems or close the technology gap with overseas competitors. There are also concerns that a government stake could lead to political interference, with decisions driven more by policy objectives than commercial viability.

Leadership Under Scrutiny

Intel’s situation is complicated by ongoing scrutiny of its leadership. Tan has faced criticism from political figures, including Donald Trump and Senator Tom Cotton, over past investments in Chinese technology firms, some allegedly tied to the military sector. Tan denies any wrongdoing and says he has the full support of the board, but the controversy remains a potential distraction at a time when the company must deliver on manufacturing milestones and secure key customer contracts.

Tips for Traders

• Treat Intel’s stock gains as speculative until deal terms are confirmed and operational progress is evident

• Follow developments on proposed semiconductor tariffs, as these could reprice sector risk and alter competitive dynamics

• Watch for production agreements from major fabless firms, which may indicate confidence in or avoidance of Intel capacity

• Track construction milestones at the Ohio fab, as further delays could undermine sentiment

• Monitor corporate governance and leadership stability, as both will be critical if government investment proceeds