While AI companies are busy trying to use your chats like it’s their diary, Washington made a power play of its own—and this one’s got billions of dollars, political strategy, and one very stressed-out Intel on the line.
Yesterday, we finally got the full receipts on a deal signed just last week between Intel and the Trump administration, and let’s just say… it’s giving “national security over everything.”
Here’s what’s up: Intel’s foundry business—its custom chip-making side hustle—has been bleeding cash (to the tune of $3.1B in Q2 losses) and looked like a prime spin-off candidate. But Washington wasn’t having it. Instead, they locked Intel into a deal that feels less like a handshake and more like golden handcuffs:
Uncle Sam buys in: The U.S. government scooped up 10% of Intel’s shares.
Five-year clause: if Intel loses control of its foundry, Washington can scoop up an extra 5% stake at $20/share.
In exchange? Intel walked away with $5.7B in funding, straight from the CHIPS Act—the $53B initiative aimed at making U.S. chipmaking great again.
So, why the drama? It’s all about the Trump administration wanting more chip-making done in the U.S.—at a time when most of the industry leans on Taiwan’s TSMC for manufacturing.
But here’s the catch: Intel’s foundry is kind of a dumpster fire. It’s losing money, investor confidence is shaky, and the exec who built the division—Pat Gelsinger—abruptly left last year. Basically, Washington is betting billions that Intel can turn this ship around while tethered to a business Wall Street wanted to cut loose. It’s bold. Risky. Messy.
Bottom line:
This is like forcing your friend to keep driving a beat-up car because it “builds character,” except the car is worth billions, and now the government owns a piece of it.
Best-case scenario: this becomes the start of America’s chip comeback story. Worst-case? Five years of headaches and a massive taxpayer bill.
Either way, Intel just went from private sector heavyweight to a starring role in Washington’s geopolitical tech strategy.
The full report is here in case you’re curious.
