In a move to bolster domestic semiconductor manufacturing, Intel has secured $5.7 billion in early funding from the U.S. Department of Commerce under a revised agreement related to the CHIPS and Science Act. This accelerated funding is designed to fast-track Intel's expansion plans amid intense geopolitical and economic pressures.
The agreement, revealed on August 28, 2025, represents a renegotiation of terms from a previous funding deal in November 2024. Under the revised terms, Intel gained immediate access to $5.7 billion by issuing 274.6 million shares to the government, with additional options if certain conditions arise. The revised terms also loosened several requirements, meaning Intel no longer needs to meet earlier project benchmarks to access the funds, provided the company demonstrates it has already invested nearly $7.9 billion in eligible projects. Intel certified that it had spent at least $7.87 billion in eligible costs on projects covered by the agreement.
Several restrictions still apply to the funds. Intel is prohibited from using the funds for dividends or stock buybacks. The funds also cannot support expansions in specific foreign countries or facilitate ownership changes with prohibited parties. The agreement aims to maintain U.S. control over Intel's foundry and contract manufacturing division, with the government retaining warrants for further investments if Intel's stake in the unit falls below 51%.
Intel's CFO, David Zinsner, emphasized that the government's equity investment serves as a strong incentive for the company to retain its crucial foundry business, supporting both economic goals and national security priorities. Zinsner also noted that the $5.7 billion received eliminated the immediate need to access capital markets. He believes that the U.S. government's investment in Intel and its success is helpful and beneficial for customers.
The accelerated funding gives Intel greater flexibility and financial strength to expand and modernize its U.S.-based chip manufacturing facilities. This is particularly important at a time when global supply chains remain fragile and competition with China and other rivals is fierce. Analyst Ming-Chi Kuo from TF International Securities noted that the investment stabilizes Intel's valuation but does not necessarily enhance its technological prospects.
The U.S. government will own 433.3 million new Intel shares, representing approximately an 8.8% stake in the company. The government's total investment in Intel now amounts to $11.1 billion, including earlier CHIPS Act funds and the Secure Enclave defense initiative. The Secure Enclave program will contribute $3.2 billion, with an additional 158.7 million shares issued into escrow for the Department of Commerce, to be released as the government makes further disbursements to Intel under this program.
The government's move to take a near 10% equity stake in Intel has sparked questions about the outlook for corporate America. Intel has cautioned that the government's stake could create risks for its business, potentially impacting overseas sales and future funding. Intel's CFO, David Zinsner, stated that the $5.7 billion was a quick way to get capital and that it eliminates the need to access capital markets in the near term. The government's stake in Intel reflects a broader geopolitical imperative to counter China's dominance in semiconductor production and ensure domestic supply chain resilience.
