Government Support Through the CHIPS Act

According to Bloomberg, which first reported the discussions, officials are weighing the use of funds from the $52 billion CHIPS Act to make a direct investment in Intel. The CHIPS Act, passed in 2022 during President Joe Biden’s administration, was designed to strengthen domestic semiconductor production.

Intel was the single largest recipient of the program last year, securing close to $8 billion to support new manufacturing plants in Ohio and other states. However, these projects have experienced delays and budget reductions under current CEO Lip-Bu Tan, who has scaled back the aggressive growth strategies introduced by his predecessor, Pat Gelsinger.

Financial Relief But Ongoing Challenges

For Intel, additional federal backing could ease short-term financial strain, but it won’t immediately resolve the steep challenges ahead. Once the industry leader, the company has been losing ground to rivals:

• TSMC dominates advanced chip manufacturing.
• Nvidia leads in artificial intelligence (AI) processing.
• AMD has gained share in PCs and data centers.

Intel’s next-generation manufacturing process, called 18A, has also run into problems, with reports suggesting low production yields.

“Government support might help shore up confidence, but it doesn’t fix the underlying competitiveness gap in advanced nodes,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Mixed Reactions From Washington and Intel

While the news fueled investor optimism, the White House urged caution. “Any talk of potential deals should be treated as speculation unless officially confirmed by the administration,” said spokesperson Kush Desai.

Intel, for its part, avoided commenting on the reports directly but emphasized its commitment to working with the U.S. government to reinforce America’s leadership in technology and chip manufacturing.

Wall Street’s Response

Despite official denials, the market responded quickly. Intel’s stock price surged over 7% on Thursday, pushing its market capitalization to around $104 billion. The rally comes as a welcome shift for investors after a difficult 2024, during which Intel lost nearly 60% of its market value before regaining about 19% this year.

High-Level Engagement

The speculation follows a recent meeting between President Donald Trump and Intel’s CEO Lip-Bu Tan at the White House. The encounter drew attention because Trump had previously called for Tan’s resignation over his alleged ties to Chinese technology companies.