The Trump administration has now struck a deal to take a 9.9% stake in Intel by converting outstanding federal grants into equity rather than injecting fresh capital.

Under the agreement, Washington will acquire 433.3 million Intel shares at US$20.47 (US$32.10) apiece, worth about US$8.9 billion (A$14.0 billion).

The money is coming from US$5.7 billion (A$8.9 billion) in unpaid CHIPS Act awards and $3.2 billion (A$5 billion) from the Secure Enclave defense program.

Intel shares closed 5.5% higher at $24.80 after the announcement.

As Channel News noted mid-last week, Intel’s share price had already surged 28% during August, as it became increasingly likely the company was going to be backed, in some form, by the US Government.

Intel CEO Lip-Bu Tan met President Trump a couple of weeks ago, shortly after Trump demanded his resignation over alleged ties to China.

On Friday, Trump boasted: “He walked in wanting to keep his job and he ended up giving us $10 billion for the United States. So we picked up $10 billion”.

Trump’s Commerce Secretary Howard Lutnick tweeted that the deal was “fair to Intel and fair to the American People”.

For its part, the troubled chipmaker stressed the deal lets taxpayers buy stock at a discount “while enabling the US and existing shareholders to benefit from Intel’s long-term business success”.

The US government will not take a board seat. It has agreed to lift the CHIPS Act guardrails that restricted share buybacks.

A five-year warrant also gives Washington the option to lift its stake to 15% if Intel loses majority control of its foundry business.

The move comes as Intel struggles to close the gap with TSMC and Samsung in chip fabrication technology.

The company posted a $3.2 billion operating loss in Q2 from soaring fab costs. It has cancelled planned plants in Germany and Poland and delayed projects in Ohio.

Intel’s future seems a lot more golden than it did a fortnight ago

SoftBank has also now pledged a separate $2 billion investment in the company.

As the only U.S. chipmaker still pursuing leading-edge logic R&D, Intel insists it remains critical to American tech sovereignty.

Reaction to the hotly anticipated, if unconventional, private-public partnership has been cautious.

When the plan was first floated, rival chipmakers warned that government ownership risked tilting the playing field in Intel’s favour.

Some media outlets, echoing fears in Washington, have warned the deal could have foreign governments retaliating by offering financial support – or even more financial support, as the case may be – to their own ‘national champion’ tech companies.

Whatever happens, the deal underscores how the US government is increasingly willing to move from just subsidising companies to part-owning them.

Even in the spiritual home of capitalism, the lines between free enterprise and state-backed competition are now growing blurry.