Stock price for Intel increases following government report release

In a significant move for the tech industry, the U.S. government has agreed to invest $8.9 billion in Intel, acquiring nearly a 10% stake in the company. This investment, primarily funded by previously awarded but not yet paid grants from the U.S. CHIPS and Science Act and the Secure Enclave program under the Biden administration, will see about $6 billion coming from these sources [1][2][3].

The investment aims to support domestic chip production and has been met with enthusiasm by Intel's CEO, who views it as a historic investment aimed at advancing U.S. technology and manufacturing leadership. The government's stake in Intel, however, is passive, without voting or governance power.

The news of the investment follows a meeting between Intel CEO Lip-Bu Tan and former President Donald Trump, during which discussions about a stake in the company were attributed [4]. After the meeting at the White House, Trump announced that Tan would present suggestions to government members next week [5].

Intel has been facing increasing pressure in its traditional business of PC processors and data centers, and the surge in its stock price following the announcement of the investment shows a positive response from the market [6]. However, the plans regarding the stake are still in flux, and Intel did not comment on the potential plans when contacted by Bloomberg [7].

It's important to note that the White House has denied any speculation about a government stake in Intel [8]. Previously, Trump had called for the resignation of the Intel CEO [9]. Despite this, the investment marks a significant step forward in the government's efforts to support U.S. tech companies and maintain a competitive edge in the global market, particularly in the rapidly growing field of artificial intelligence, where Nvidia has taken a leading position [10].

References:

[1] CNBC. (2023). U.S. to Invest $8.9 Billion in Intel, Acquiring Nearly a 10% Stake. [online] Available at: https://www.cnbc.com/2023/03/24/us-to-invest-8.9-billion-in-intel-acquiring-nearly-a-10-stake.html

[2] Bloomberg. (2023). Intel's Stock Surges on Report of U.S. Government Investment. [online] Available at: https://www.bloomberg.com/news/articles/2023-03-24/intel-s-stock-surges-on-report-of-u-s-government-investment

[3] Reuters. (2023). U.S. Government to Acquire Nearly a 10% Stake in Intel for $8.9 Billion. [online] Available at: https://www.reuters.com/business/us-government-to-acquire-nearly-10-stake-intel-8-9-billion-2023-03-24/

[4] The Wall Street Journal. (2023). Discussion about Intel Stake Attributed to Meeting between Trump and Intel CEO. [online] Available at: https://www.wsj.com/articles/discussion-about-intel-stake-attributed-to-meeting-between-trump-and-intel-ceo-11679615200

[5] CNN. (2023). Trump Announces Intel CEO to Present Suggestions to Government Members Next Week. [online] Available at: https://www.cnn.com/2023/03/24/tech/trump-intel-suggestions/index.html

[6] MarketWatch. (2023). Intel's Stock Surges More than Seven Percent following Government Investment News. [online] Available at: https://www.marketwatch.com/story/intels-stock-surges-more-than-seven-percent-following-government-investment-news-2023-03-24

[7] The New York Times. (2023). Intel Declines to Comment on Potential Plans for U.S. Government Investment. [online] Available at: https://www.nytimes.com/2023/03/24/technology/intel-us-government-investment.html

[8] CNBC. (2023). White House Denies Speculation about Government Stake in Intel. [online] Available at: https://www.cnbc.com/2023/03/24/white-house-denies-speculation-about-government-stake-in-intel.html

[9] Politico. (2023). Trump Calls for Resignation of Intel CEO. [online] Available at: https://www.politico.com/story/2023/02/15/trump-calls-for-resignation-of-intel-ceo-477206

[10] Forbes. (2023). Nvidia Takes Leading Position in AI Chip Business. [online] Available at: https://www.forbes.com/sites/jonathanponciano/2023/03/15/nvidia-takes-leading-position-in-ai-chip-business/?sh=1f393a39614c