By Adam Clark
Intel stock was falling early Wednesday as shareholders digest the likelihood of the U.S. government taking a sizable stake in the company. Micron Technology and Taiwan Semiconductor Manufacturing could be about to face a similar demand.
Intel shares were down 1.5% at $24.92 in premarket trading. The stock rose 7% on Tuesday after Commerce Secretary Howard Lutnick confirmed that the government was in talks with Intel to take a stake in the company in exchange for the billions in funding it is set to receive under the Chips Act, in an interview with CNBC.
"It's not governance; we're just converting what was a grant under Biden into equity," Lutnick said. "Nonvoting."
While Lutnick didn't confirm the potential size of the conversion, it was previously reported by Bloomberg that the U.S. government is considering taking a 10% stake in Intel. That would imply a position worth more than $10 billion -- Intel is in line for up to $10.9 billion in grants from the Chips Act. Intel didn't immediately respond to a request for comment early on Wednesday.
"This incremental dilution gives us a bit of pause, but the benefits of being on the right side of Trump and his potential successor may be worth it since Intel could literally become a bargaining chip (no pun intended) in potential trade deals," wrote Melius Research analyst Ben Reitzes in a research note. "Also, customers could consider the benefits of currying favor with the Administration when considering Intel as a foundry customer."
Reitzes has a Hold rating and target price of $25 on Intel shares.
While Intel might welcome the Trump administration's involvement, its peers might be less keen to welcome the U.S. government as a shareholder in their own businesses. The Trump administration could pursue equity stakes deals in other companies set to receive funding, including Taiwan Semiconductor Manufacturing (TSMC), according to Lutnick.
TSMC, Samsung Electronics and Micron are among the other major recipients of incentives under the Chips Act, which was passed under the Biden legislation and allocated a total of $53 billion to boost semiconductor manufacturing in the U.S. The companies didn't immediately respond to requests for comment early on Wednesday.
The U.S. government taking a stake in Taiwan's TSMC and South Korea's Samsung -- with the associated equity dilution -- would be politically sensitive. Taiwan's state-run National Development Fund is TSMC's largest shareholder, with a 6.4% stake. South Korea's National Pension Service -- a public pension fund -- is a significant shareholder in Samsung.
Write to Adam Clark at adam.clark@barrons.com
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August 20, 2025 06:48 ET (10:48 GMT)
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