US examines equity stake in chipmakers in exchange for Chips Act cash grants, sources say

WASHINGTON - US Commerce Secretary Howard Lutnick is looking into the government taking equity stakes in Intel as well as other chip companies in exchange for grants under the Chips Act that was meant to spur factory-building around the country, two sources said.

As part of a plan to revive US manufacturing – a key Trump agenda – Mr Lutnick said on Aug 19 that the US government wants an equity stake in Intel in exchange for cash grants approved by the administration of former president Joe Biden.

Now Mr Lutnick wants to expand that plan to other companies, according to a White House official and a person familiar with the situation.

The Trump administration has recently made unusual deals with US companies, including allowing artificial intelligence chip giant Nvidia to sell its H20 chips to China in exchange for the US government receiving 15 per cent of those sales. The Pentagon is slated to become the largest shareholder in a small mining company to boost output of rare earth magnets.

The government’s intervention in corporate matters has worried critics, who say President Donald Trump’s actions create new categories of corporate risk and that a bad bet could mean a hit to taxpayer funds.

Much of the funding under the Chips Act has not yet been disbursed to companies such as Micron, Taiwan Semiconductor Manufacturing Co (TSMC), Samsung and Intel.

Speaking to reporters in Taipei on Aug 20 and asked whether the US government could take a stake in TSMC, Taiwan Economy Minister Kuo Jyh-huei said his ministry had just heard about it and “needs some time to discuss”.

The two sources told Reuters on Aug 19 that US Treasury Secretary Scott Bessent is also involved in the Chips Act discussions, but that Mr Lutnick is driving the process.

The Commerce Department oversees the US$52.7 billion (S$67.7 billion) Chips Act money.

Mr Lutnick has been pushing the equity idea, the sources said, adding that Mr Trump likes the idea.

White House Press Secretary Karoline Leavitt confirmed earlier that Mr Lutnick was working on a deal with Intel to take a 10 per cent government stake.

“The President wants to put America’s needs first, both from a national security and an economic perspective, and it’s a creative idea that has never been done before,” she told reporters.

Speaking on CNBC, Mr Lutnick said the US wants a return on its “investment”. “We’ll get equity in return for that... instead of just giving grants away,” he said.

Mr Trump has previously said he wanted to kill the Chips Act programme.

Mr Lutnick’s comments suggested that any stake would be non-voting, meaning it would not enable the US government to tell the company how to run its business.

His comments came a day after SoftBank Group agreed to invest US$2 billion in Intel, which has struggled to compete after years of management blunders.

“The Biden administration literally was giving Intel money for free and giving TSMC money for free, and all these companies just giving the money for free, and Donald Trump turned it into saying, ‘Hey, we want equity for the money. If we’re going to give you the money, we want a piece of the action for the American taxpayer’,” Mr Lutnick said. REUTERS