Pat Gelsinger couldn’t manage it, but Donald Trump and his top business appointees reckon they have what it take to pull Intel out of its long-running tail spin.
The White House confirmed yesterday that Trump’s team are working on a deal that would result in the US government taking a 10% stake in the storied Silicon Valley chip maker.
And the US government could take stakes in more chip companies as is looks to reduce the nation’s reliance on a silicon supply chain that stretches across the pacific to Taiwan. Which could have a knock on effect on what chips are running on desktops and in datacentres worldwide.
It comes on the heels of Softbank taking a $2bn stake in the company, a move which boosted Intel’s stock price earlier this week.
Intel's troubles
Intel has stumbled from crisis to crisis in recent years, including fumbling manufacturing transitions, failing to carve out a role in new sectors including the phone market, and all but missing out on the AI boom.
It brought back former CTO and longtime engineer Pet Gelsinger to oversee a turnaround in 2021, but his strategy to build out a fabrication business failed to take off, and he left in 2024.
He was replaced by Lip-Bu Tan who has overseen another savage round of layoffs at the company. There has been speculation Intel could give up manufacturing altogether.
Just to complicate matters, Donald Trump said that Tan had conflicts of interest and should resign – only for the US president to change his mind.
That was followed by White House press secretary Karoline Leavitt confirming the deal was on the cards yesterday, saying it was part of Trump’s strategy to put America first, “both from a national security and economic perspective.”
It would mean the US government swapping existing funding to encourage Intel to build fabs in the US for non-voting equity.
The US government could also take stakes in other US chip companies, Reuters reported.
Building in America
Commerce secretary Howard Lutnick told CNBC yesterday, “We need to make our own chips here. We cannot rely on Taiwan, which is 9,500 miles away from us and only 80 miles from China. So you can’t have 99% of leading-edge chips made in Taiwan.”
He added, “We want Intel to be successful in America. Okay. We’d like an American transistor built in America, right?”
Such deals would further extend the administration’s influence over the US’ semiconductor industry – and potentially blur the lines between what is good business and what serves the White House.
And that would have ripples right across the world, as businesses and public sector organisations become ever more reliant on tech in general and AI in particular. Which partly explains the UK and EU's belated focus on silicon sovereignty.
Trump – and the previous administration to an extent – have been using chips as a lever in foreign policy, including restricting exports of high-end chips to China to maintain the US’ edge in AI.
Last week the White House revealed a deal under which NVIDIA and AMD would be granted export licenses for some chips but would pay 15% of the revenues generated.
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