Intel has been on the hot seat with Washington, D.C., over concerns that it may be slow-walking semiconductor manufacturing plans following a shakeup that removed former CEO Pat Gelsinger and installed current CEO (and former Board of Directors member) Lip-Bu Tan earlier this year.
The worries came to a boiling point in early August when President Trump suggested Lip-Bu Tan was “highly CONFLICTED,” suggesting he should resign after Arkansas Senator Tom Cotton questioned Tan’s ties to Chinese chipmakers, including investments.
The situation was heated enough that Tan boarded a plane only days later to meet with President Trump face-to-face on August 11. This meeting has since led to the possibility that the US may take an ownership stake in Intel (INTC) , an idea that’s sparked debate.
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Treasury Secretary Bessent defends US investment in Intel
President Trump has previously discussed the potential for the US to create a sovereign wealth fund to profit from US business investments similar to those of other countries, including Saudi Arabia.
He’s already created a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile funded by seized or forfeited cryptocurrency.
Related: Lip-Bu Tan’s net worth: The Intel CEO’s wealth after White House visit
The idea has drawn praise for its potential to provide a return on government dollars given to companies via grants, and concern over whether it could create an unlevel playing field for rivals.
Secretary Bessent, a former Wall Street hedge fund manager trained under legendary stock picker Stanley Druckenmiller, attempted to alleviate some of those concerns in a CNBC interview on August 19.
“The last thing we are going to try and do is take a stake and then try to drum up business,” said Bessent. “There is no talk of trying to force companies to buy from Intel.”
Bessent argued that providing financial stability to Intel, and perhaps other companies in the future, is a matter of national security.
In recent years, the US government has paid significant attention to the high-tech industry over the risks associated with selling next-gen technology to countries, including China, which could potentially use that technology against us.
For instance, earlier this year, Nvidia and AMD faced additional restrictions limiting the sale of artificial intelligence chips to China, resulting in steep write-offs. Last month, those semiconductor companies agreed to share 15% of their China revenue on those chips with the U.S. in exchange for new export licenses.
“99% of the advanced chips in the world are made in Taiwan,” said Bessent. “For national security, we have to stop that single point of failure.”
Howard Lutnick is all-in on an Intel stake
The seeds for an investment in Intel were planted by the Biden Administration’s $52.7 billion CHIPS and Science Act in 2022, legislation designed to provide grants to semiconductor manufacturers to build “fabs,” large semiconductor manufacturing plants, on US soil.
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Intel was the largest recipient of CHIPS Act grants, receiving $7.9 billion. When those funds were awarded in November 2024, the White House said they would “directly support Intel’s expected U.S. investment of nearly $90 billion by the end of the decade” and that “The Department will disburse the funds based on Intel’s completion of project milestones.”
Intel’s progress toward boosting US manufacturing has slowed amid mounting losses and Tan’s pivot toward cost-cutting, including layoffs.
“We need to make our own chips here,” said Lutnick on CNBC. “Why are we giving a company worth $100 billion this kind of money? What is in it for the American taxpayer? The answer Donald Trump has is we should get an equity stake for our money.”
The White House has confirmed that Lutnick is negotiating with Intel on an equity stake, according to Reuters.
The mechanics of such a deal aren’t fully fleshed out, given that the CHIPS Act doesn’t require companies to provide equity to receive grants.
Nevertheless, the White House is committed to pursuing this approach, possibly expecting that companies will decide the upside of US ownership outweighs any risks.
“Instead of just giving grants away, we should get benefits,” said Lutnick.
What’s next for Intel amid losses?
I remember when Intel was one of the stock market’s hottest stocks during the Internet boom. However, over the years, Intel has lost luster to smaller, faster-moving rivals like Nvidia, which has turned a niche of making super-fast graphic processors for gaming into the most coveted chips used to train and operate AI chatbots and agentic AI apps.
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Last quarter, Intel’s sales were flat, while Nvidia’s grew 69% year over year. Intel lost 10 cents per share in the second quarter, while Nvidia made 81 cents per share, up 33% from one year ago.
Intel would seem unlikely to catch up to Nvidia, given Nvidia commands roughly a 90% share in the AI chip market, even if it gets an influx of government cash.
However, that doesn’t mean Intel can’t continue to win business providing silicon for other uses, such as industrial or consumer technology, like desktops and laptops, or that it can’t win in supplying CPUs that help AI work more efficiently. For instance, its Xeon 6776P processor is the host CPU for NVIDIA’s high-end DGX B300 server for AI workloads.
It also doesn’t mean that Intel’s renewed cost-consciousness won’t translate into stock-friendly earnings growth.
“We are also taking the actions needed to build a more financially disciplined foundry,” said Tan in Intel’s second-quarter earnings release.”
Wall Street’s average estimate is for earnings per share to rise to 66 cents per share in 2026 from 12 cents in 2025 and revenue to reach $53.8 billion, up from $52.01 billion.
Still, Intel’s stock is already up 26% this year, suggesting that at least some of this optimism is currently priced into its stock.
According to TipRanks, only one Wall Street analyst rates it a “buy”, 26 rate it a “hold,” and 3 rate it a “sell.” Hardly a resounding vote of confidence.
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