US government’s Intel stake jumps 300% to $36B after CHIPS Act grants were converted to equity under Trump

In short: The US government’s 9.9% stake in Intel, acquired for $8.9 billion last August by converting CHIPS Act grants and Secure Enclave funds into equity at $20.47/share, is now worth approximately $36 billion after Intel’s stock surged 20%+ on a massive Q1 earnings beat. The $26.5 billion unrealised gain is one of the most profitable government investments in American industrial history, but it was accidental: Trump opposed the CHIPS Act’s conditions and converted the grants to equity as fiscal discipline, not industrial strategy. No exit plan has been articulated.

The United States government owns approximately 433 million shares of Intel, acquired last August for $8.9 billion at $20.47 per share. After Intel’s stock surged more than 20% on Wednesday following a first-quarter earnings beat that nobody on Wall Street had modelled, that stake is worth roughly $36 billion. The unrealised gain is $26.5 billion, a 300% return in eight months. It is, by any measure, one of the most profitable government investments in American industrial history. It is also one that almost nobody in Washington intended to make.

The story of how the federal government ended up holding a 9.9% stake in America’s most important chipmaker is a story about political opportunism producing an accidentally excellent outcome. The CHIPS and Science Act, signed in 2022, allocated $52 billion for domestic semiconductor manufacturing. Intel was awarded the largest share: $8.5 billion in grants plus $11 billion in loans. When the Trump administration took office, it opposed the programme’s conditions, which included project labour agreements, union crew requirements for plant construction, restrictions on stock buybacks for five years, and a commitment by Intel to invest $100 billion of its own capital. Rather than disburse the remaining grants, the administration converted $5.7 billion in unpaid CHIPS Act funds and $3.2 billion from the Secure Enclave defence programme into a direct equity stake. The original conditions were stripped. Senator Elizabeth Warren called it handing “billions of dollars to Intel, with no meaningful strings attached.”

The accidental windfall

Trump had previously called the CHIPS Act “a terrible deal” and advocated for its repeal. The equity conversion was framed not as industrial strategy but as fiscal discipline: if the government was going to spend taxpayer money on a chipmaker, it should at least own a piece of the company. The structure includes a five-year warrant for an additional 5% of Intel shares at $20, exercisable only if Intel sells majority control of its foundry business, a poison pill designed to keep domestic chip manufacturing under American ownership. The government holds no board seat and has agreed to vote its shares in alignment with Intel’s board, making it a passive investor with no direct management influence.

What has changed is not the government’s involvement but Intel’s trajectory. Intel beat earnings expectations for six straight quarters under CEO Lip-Bu Tan, who replaced the ousted Pat Gelsinger in March 2025. First-quarter revenue was $13.6 billion, 10% above the consensus estimate. Adjusted earnings per share came in at $0.29, twenty-nine times the $0.01 analysts had expected. Data centre and AI revenue hit $5.1 billion, up 22% year over year. The company guided second-quarter revenue of $13.8 billion to $14.8 billion, roughly $1 billion above expectations. Intel’s stock is up more than 80% year to date, after rising 84% in 2025. The government bought near the bottom of a cycle that has since reversed dramatically.

The Tan turnaround

Gelsinger was forced out in December 2024 after Intel’s stock had fallen 60% under his leadership, the company posted a $16.6 billion loss, halted its dividend, and announced 15,000 layoffs. Lip-Bu Tan, the former Cadence Design Systems chief executive and a former Intel board member, inherited a company in crisis and has delivered a turnaround that Time magazine recognised by naming him to its 100 most influential people list. He cut more than 20,000 additional jobs, refocused the company on its 18A chipmaking process, and secured partnerships that had seemed implausible a year earlier.

Intel 18A, the process node that integrates RibbonFET gate-all-around transistors and PowerVia backside power delivery, reached high-volume manufacturing in January 2026. Yields exceed 60% and are improving at roughly 7% per month, with industry-standard levels expected by 2027. Microsoft is using Intel Foundry to produce custom AI accelerators. Amazon is commissioning custom Xeon chips and an AI fabric chip. Musk’s teams contacted major chip equipment suppliers for the $25 billion Terafab AI chip plant, which Intel was named as the foundry partner for, arguably the single largest catalyst for the stock’s surge. Nvidia, despite pausing its own 18A testing over yield concerns, invested $5 billion in Intel common stock, a vote of confidence in the company if not yet in the process node.

The strategic logic that nobody articulated

The national security case for domestic chip manufacturing has only strengthened since the CHIPS Act was written. Semiconductor supply chains face acute raw material shortages because of the Middle East conflict, with South Korea’s chip industry scrambling for naphtha derivatives essential to photoresist coatings and wafer processing. China-Taiwan tensions remain the industry’s existential risk: if China disrupts TSMC’s fabs, the United States would lose access to the foundry that produces approximately 64% of the world’s advanced chips. Chinese foundries are racing to expand chip capacity, with Nexchip filing for a Hong Kong listing to fund a $5.1 billion new fab, demonstrating that Beijing’s investment in semiconductor self-sufficiency has not slowed despite American export controls.

The Secure Enclave programme, which provided $3.2 billion of the government’s investment, exists specifically to give the US military a domestic source for classified chip production. Intel is building two fabs in Ohio at a cost of $28 billion and two more in Arizona at $32 billion, though the Ohio facilities have been delayed to 2030 or 2031, years behind the original schedule. Intel’s share of the global foundry market remains below 5%, against TSMC’s 64% and Samsung’s 12%. The government’s bet is that Intel can close that gap. The $26.5 billion return to date is a function of the market’s increasing willingness to believe the same thing.

The precedent problem

The last time the US government held a comparable stake in a major corporation was during the auto bailout of 2008 and 2009, when it acquired 60.8% of the restructured General Motors under the Troubled Asset Relief Programme. The government exited fully by 2013, taking a net loss of approximately $12.1 billion. The Intel investment differs in two critical ways: it was not a crisis rescue, and it is sitting on an enormous gain. Those differences create a problem that the GM bailout never did. No one in Washington has articulated a plan for what to do with a $36 billion stake in a company that produces chips for AI data centres, military systems, and consumer electronics.

The Council on Foreign Relations has tracked the Intel holding as part of a broader Trump administration pattern of building a “strategic portfolio” of investments in national security-related companies spanning semiconductors, minerals, and nuclear energy. The Cato Institute and Competitive Enterprise Institute have raised concerns about the precedent of government ownership of private companies, with the latter comparing it to Peronist industrial policy. The Chicago Policy Review argued it was “common sense, not socialism.” The irony is that the ideological debate is being conducted against the backdrop of a $26.5 billion gain that makes the investment impossible to criticise on financial terms, whatever one thinks of the principle.

Analysts remain split. Of 30 covering Intel, 11 rate it a buy, 24 a hold, and 5 a sell. The consensus price target of approximately $47 sits well below where the stock is now trading, suggesting that either analysts are lagging the turnaround or the market has priced in more optimism than the fundamentals warrant. The government, as a passive shareholder with no exit timeline, no board seat, and no stated disposition strategy, is along for the ride. It converted a political dispute over labour conditions into the most profitable public investment since TARP, and it did so by accident. The question is whether that accident produces a policy framework, a disorderly exit, or something that nobody in Washington has thought of yet, because the chips programme was designed to build fabs, not to generate venture-capital returns for the US Treasury.