Lutnick says Intel has to give government equity in return for CHIPS Act funds

In a significant development, Commerce Secretary Howard Lutnick announced that Intel must provide an equity stake to the U.S. government in exchange for funding from the CHIPS Act. Speaking on CNBC's "Squawk on the Street," Lutnick emphasized, "We should get an equity stake for our money," indicating a push for accountability in financial support for the semiconductor industry. The news comes as Intel's shares surged by 7% following speculation about the government's potential involvement with the company. Recent reports suggested that the Biden administration is considering a 10% stake in Intel, which could position the U.S. government as the chipmaker's largest shareholder. In a parallel move, Intel announced a $2 billion investment from SoftBank, marking the Japanese conglomerate as the fifth-largest shareholder in the company, according to FactSet. Lutnick clarified that any agreement would not grant the government voting or governance rights within Intel. He stated, "It's not governance, we're just converting what was a grant under Biden into equity for the Trump administration, for the American people. Non-voting." This shift reflects a broader strategy to ensure returns on taxpayer investments in key industries. Additionally, Lutnick hinted that former President Donald Trump may pursue similar equity arrangements with other recipients of CHIPS Act funding. Intel was allocated approximately $7.9 billion, while Taiwan Semiconductor Manufacturing Co. received $6.6 billion to enhance chip production at its facilities in Arizona. Lutnick criticized the previous administration's approach, suggesting that companies were receiving funds without sufficient returns, stating, "Donald Trump turns that into saying, 'Hey, we want equity for the money.'" Intel has faced challenges in leveraging the artificial intelligence surge in semiconductor manufacturing and has made costly investments in its manufacturing capabilities. The company recently appointed Lip-Bu Tan as its new CEO, following the departure of Pat Gelsinger. Tan's meeting with Trump last week, amidst allegations of his connections to China, adds another layer of complexity to Intel's ongoing negotiations and strategic direction.