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Intel Corp. announced Friday that the U.S. government has agreed to acquire a 10% stake in the company in exchange for $8.9 billion in federal grants. The move, framed as a turning point for the semiconductor industry, underscores Washington’s determination to reclaim technological dominance from overseas rivals.

The funding stems from the 2022 bipartisan CHIPS and Science Act, which pledged $39 billion to bolster U.S. chipmaking. Of that, $5.7 billion in unpaid CHIPS grants and $3.2 billion from the Biden administration for secure technology contracts with the Department of Defense will be converted into Intel shares. Together with $2.2 billion Intel has already received, the federal government’s total investment in the company rises to $11.1 billion.

Intel and Washington Align on National Security

“As the only U.S. company engaged in leading-edge semiconductor R&D and manufacturing, Intel is committed to ensuring the world’s most advanced chips are American-made,” Intel CEO Lip-Bu Tan said Friday. He credited President Donald Trump’s aggressive push for U.S. manufacturing as the catalyst for a “historic investment.”

Under the deal, the government will obtain 433.3 million primary Intel shares at $20.47 apiece, equaling a 9.9% ownership. The stake will be passive—meaning no board seats or governance rights—but symbolically powerful.

Trump celebrated the agreement on Truth Social, proclaiming the U.S. “fully owns and controls 10% of Intel,” touting the arrangement as “a great deal for America and Intel alike.” Commerce Secretary Howard Lutnick echoed that sentiment, hailing the move as an engine for AI innovation and national defense.

A Battle to Reclaim U.S. Chipmaking Glory

The announcement comes amid renewed efforts to restore American leadership in semiconductors, once a field the U.S. dominated. In the early decades, U.S. factories produced 100% of the world’s chips. But by the 1990s, cheaper overseas production and heavy foreign subsidies shrank America’s share to 37%. Today, it sits at just 10%.

Past administrations sought remedies. In the 1980s, Ronald Reagan imposed tariffs on Japanese chips while cutting corporate taxes, but the decline continued. By contrast, the CHIPS Act of 2022 injected $39 billion in subsidies and another $13 billion in tax credits, helping fund 16 new U.S. chip plants.

Still, challenges remain. Intel itself has battled investor lawsuits, including a recently dismissed case alleging it misled shareholders over manufacturing struggles. Its foundry services posted a $7 billion loss in 2023, sending shares tumbling.