On August 22, Trump announced that his administration bought a 10% stake in Intel; government grants to the company will be converted into an equity share.
The 9.9% stake amounts to $8.9 billion, which will be used for building and expanding American factories, apparently. The Trump administration received a $4 discount per share.
The government will enjoy passive ownership of the Intel shares, and will not be awarded a board seat. However, the government must vote with Intel’s board “when shareholder approval is necessary, with ‘limited exceptions.'”
The equity stake also includes a five-year warrant at $20 a share for an additional 5% of Intel stock, which the U.S. can use if Intel loses control of the foundry business.
Reuters
Hypocritically, Trump utilized funds from the CHIPS Act, signed by former President Joe Biden, despite his calls to remove the bill. He also used $3.2 billion from the Secure Enclave program, also created by Biden.
Intel’s stock increased by 5.5% after the purchase during regular trading. This should increase fears of market manipulation by the White House. Critics have also warned that the Trump administration’s practice of buying shares in certain companies creates new categories of risk.
The purchase itself is laden with risk, as Intel’s problems go beyond cash, according to senior portfolio manager at Synovus Trust, Daniel Morgan. Intel is technologically behind companies such as TSMC, as reflected in its contract chip manufacturing business.
Trump has previously warned that Intel CEO Lip-Bu Tan has conflicts of interest. Trump has not explained why Tan is suddenly more trustworthy.
This purchase was made despite Trump portraying himself as a free-market capitalist.
