Intel gets $5.7B early; U.S. takes 10% share in chipmaker

Post by : Monika

Photo: Reuters

On August 29, 2025, Intel, one of the world’s biggest computer chip companies, announced a major update to its deal with the U.S. government. This new agreement changes parts of an earlier deal that was made under the CHIPS Act, a U.S. law designed to bring more chip production back to America.

Under the new terms, Intel will receive $5.7 billion in funding earlier than expected. This means the company now has access to a large amount of money sooner, helping it speed up projects to make chips in the United States.

Rules for Using the Money

• The money from the U.S. government comes with strict rules. Intel cannot:
• Use the money to pay dividends to its shareholders.
• Buy back stock to raise share prices.
• Expand operations in certain countries outside the U.S.
• This ensures that the funding is used only to support American chipmaking projects and not for financial moves that benefit investors directly.

Stock and Ownership Changes

In exchange for getting the money early, Intel agreed to give the U.S. government 274.6 million shares of Intel stock. On top of that, the government also has the option to buy up to 240.5 million more shares later if certain conditions are met.

Additionally, Intel placed 158.7 million shares in escrow. These shares are held back and will only be released if the government provides more money for a special project called the Secure Enclave, which focuses on building advanced chip-making technology and secure facilities.

With all these stock transfers, the U.S. government now owns about 9.9% of Intel. This is unusual because governments normally do not own shares in private companies.

How Much Has Been Invested So Far

Intel explained that it has already spent around $7.87 billion on projects linked to the CHIPS Act. When combined with past and current investments, the U.S. government’s total support for Intel now adds up to $11.1 billion.

Officials said that this deal helps ensure Intel stays in control of its manufacturing division, known as the “foundry.” This is seen as important for protecting American technology and reducing reliance on foreign chipmakers.

Why This Matters

1. Money Arrived Sooner
Intel now has $5.7 billion earlier than expected. This will allow the company to speed up the building of new chip factories and move faster in producing advanced computer chips in America.

2. U.S. Owns Part of Intel
The U.S. government now owns nearly 10% of the company. This shows a strong partnership between the government and Intel, but it also raises questions about how much influence the government might have over business decisions.

3. Clear Rules on Spending
The rules stop Intel from using the money in ways that don’t help with U.S. chipmaking. The government wants to make sure the funds are used only for making and improving chips inside the country.

4. Support for U.S. Technology
The deal highlights how serious the U.S. is about strengthening its technology independence. By investing heavily in Intel, the government is showing that it wants America to lead in chip production and not depend too much on foreign suppliers.

5. Complicated Stock Setup
The deal is not just about cash. The stock arrangements are complex, with some shares given now, some shares promised for later, and others kept in escrow. This structure means the U.S. government’s share in Intel could increase in the future.

Questions and Concerns

While the deal looks like a big win for American chipmaking, some people have concerns. Investors worry that government ownership might lead to more political influence in Intel’s decisions. For example, choices about where to build factories or how to invest money could be affected by politics, not just business needs.

On the other hand, some experts believe this deal could become a model for other companies. If it works well, the government might make similar agreements with other U.S. technology firms to boost domestic production.

CHIPS Act