The Trump administration wants the United States to bethedominant force when it comes to artificial intelligence, and one way the administration hopes to achieve primacy is by bringing semiconductor manufacturing back to the U.S.
To help with that transition, President Donald Trump has introducedpotential chip tariffs and policiesin recent months meant to bring more semiconductor manufacturing stateside.
In late August, the Trump administration took an unprecedented step toward that goal when it converted an existing government grant, meant for domestic semiconductor manufacturing, into a10% equity stake in Intel.
This deal wasstructured to grant the U.S. government additional equityin Intel if the company’s ownership of its foundry business — which manufactures custom chips for international customers — drops below 50% within the next five years.
But Intel isn’t the only U.S.-based semiconductor company, nor the only one that manufactures its chips overseas. So, how did Intel find itself as the main character in the Trump administration’s plans for AI dominance? Let’s take a look.
First, some history: In March 2021, Intel launched its foundry business alongside a commitment to spend $20 billion building two new chip-manufacturing plants in Arizona.
A year later, the company announced itsintent to acquire Tower Semiconductor, a company in the custom foundry industry, for $5.4 billion, but that didn’t pan out due to regulatory troubles, and the companiescanceled the mergerin August 2023.
Since then, Intel Foundry has struggled to gain momentum and there have been rumors that the businesswasn’t able to get large customerson board.
In 2024, then-CEO Pat Gelsinger announced Intel was taking steps totransition Intel Foundry into an independent subsidiary. This came as board members called to spin the unit out entirely even as the company grappled with slowing growth, cost cuts, and massive layoffs.
In November 2024, there was a noticeable bright spot as the company reached a deal with the U.S. government for$7.86 billion in federal grantsthrough the 2022 Chips and Science Act meant to boost domestic semiconductor manufacturing.
Intel announced that its former board memberLip-Bu Tan would rejoin the company as CEOin early March. Tan got right to work with a potential turnaround plan that centered on refocusing the company,sheddingitsnoncoreunits, andsignificantly trimmingits workforce.
In July, the company said it wasscaling back some of its manufacturing projects, including itsalready-delayed $28 billion fabrication plant in Ohio.
A few weeks later, the Trump administration came knocking.
On August 6, Republican senator Tom Cotton penned a letter to Intel’s board of directors, asking about Tan’s ties to China, including his relationship withCadence Design Systems, according toreporting from Bloomberg. Cadence had been charged with violating U.S. export controls to China, according to Bloomberg, and has sold tech to a military school in China. Tan was at Cadence’s helm for more than a decade.
The next day, August 7,Trump demandedthat Tan resign “immediately,” accusing the CEO of being “highly conflicted,” though the president didn’t provide any evidence.
The following week, Tan headed to Washington, D.C., to meet with Trump to discuss ways the government and Intel could work together toward achieving the administration’s goals of reshoring semiconductor manufacturing in the U.S. Shortly after, rumors started to swirl that theU.S. government might be considering an equity stake in Intel.
On August 18, SoftBank said it was investing$2 billion in Intel. Four days later, the U.S. government announced its deal with Intel.
Thedeal ensuresthat Intel gets the grant money it was already awarded, and the Trump administration is claiming that it will be a passive investor that will vote alongside Intel’s interests. But will that actually help Intel?
Source: Techcrunch
