The Trump administration hopes that the US is the dominant force when it comes to artificial intelligence, and one way the administration wants to achieve its advantage is to bring semiconductor manufacturing back to the US
To help with that transition, President Donald Trump has introduced potential chip tariffs and policies in recent months aimed at bringing more semiconductor manufacturing nations.
In late August, the Trump administration took an unprecedented step towards that goal when it converted existing government grants dedicated to domestic semiconductor manufacturing into Intel’s 10% stake.
The agreement was configured to grant Intel additional capital to the US government if ownership of foundry businesses that manufacture custom chips for international customers falls below 50% within the next five years.
However, Intel is not the only US-based semiconductor company, nor is it the only company that manufactures chips overseas. So how did Inter find himself as the hero of the Trump administration’s AI domination plan? Let’s take a look.
Chip Context
First, some history: In March 2021, Intel launched its foundry business with its commitment to spending $20 billion to build two new chip manufacturing plants in Arizona.
A year later, the company announced its intention to acquire Tower Semiconductor, a custom foundry industry company, for $5.4 billion, but it did not pan out due to regulatory issues.
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Since then, Intel Foundry has struggled to gain momentum, and there have been rumours that the business has not been able to carry large customers.
In 2024, then CEO Pat Gelsinger announced that Intel was taking steps to migrate Intel Foundry to an independent subsidiary. This came when board members called for a full unit spin-out, even if the company tackled slowing growth, cost-cutting and massive layoffs.
In November 2024, the company had a prominently bright spot as it made a deal with the US government with a federal grant of $7.866 billion through the 2022 Chips and Science Act, which aimed to boost domestic semiconductor manufacturing.
Gelsinger then suddenly retired in December 2024.
Rip Butane’s Return
Intel announced that former board member Lip-Bu Tan will be rejoining the company as CEO in early March. Tan has now refocused the company, working on a potential turnaround plan focusing on reducing non-core units and trimming the workforce significantly.
In July, the company said it was shrinking several manufacturing projects, including a $28 billion manufacturing plant in Ohio.
A few weeks later, the Trump administration knocked.
On August 6, Republican Sen. Tom Cotton wrote a letter to Intel’s board of directors asking about Tan’s relationship with China, including its relationship with the Cadence Design System, according to a report from Bloomberg. According to Bloomberg, Cadence was accused of breaching US export controls to China and sold his technology to a Chinese military school. Tan has been at the helm of Cadence for over a decade.
The following day, on August 7, Trump demanded that Tan resign “quickly” and accused the CEO of being “very conflicted,” but the president did not provide evidence.
The following week, Tan headed to Washington, D.C. to meet with Trump, discussing how the government and Intel would work together to achieve the administration’s goal of reusing semiconductor manufacturers in the US, and rumors began to swirl that the US government could be considering Intel’s fairness interests.
On August 18th, SoftBank said it was investing $2 billion in Intel. Four days later, the US government announced its contract with Intel.
The deal guarantees Inter will get the grants already awarded, and the Trump administration has claimed it is a passive investor who will vote along with Intel’s interests. But does that actually help Intel?
It’s a bit unclear what will happen next.
