Intel Secures $8.5 Billion in US Government Funding, But deal Comes with Risks
Intel has reached an agreement with the U.S. government to receive $8.5 billion in funding, a move intended to bolster domestic chip manufacturing. The deal, finalized on August 22, 2025, is structured in two phases.The first, totaling approximately $5.7 billion, represents an acceleration of previously committed funds from the Department of Commerce under the CHIPS Act. The second, around $3.2 billion, is tied to the CHIPS Act’s “Secure Enclave” program, dedicated to producing critical chips for aerospace and defense applications, and will be disbursed as specific milestones are achieved. This arrangement provides Intel with immediate capital infusion alongside a pipeline of future funding linked to government initiatives.
In exchange for the funding, Intel will issue up to 433 million shares of stock to the U.S. government. An initial 275 million shares will be transferred upon receipt of the first funding tranche, while roughly 159 million shares will be held in escrow, released contingent on the delivery of Secure Enclave funds. A key provision dictates that even if Intel doesn’t receive the full Secure Enclave allocation, half of the escrowed shares will still be transferred to the government, irrespective of contract values or volume, with the remaining half being cancelled.
Though, Intel acknowledges potential downsides to the agreement. The company’s filings detail concerns about possible negative reactions from various stakeholders, including investors, employees, suppliers, and competitors. The company also flagged the possibility of legal challenges and increased political scrutiny. Furthermore, Intel cautioned that a shift in U.S. political leadership could jeopardize or even reverse aspects of the deal, leading to further complications. The company also admitted it is still assessing the complete financial, tax, and accounting implications of the agreement, suggesting further unforeseen issues could emerge.
Despite these concerns, former U.S. President Donald Trump publicly praised the deal, stating on social media that he “paid zero for Intel” and that the shares are “worth approximately $11 billion,” all benefiting the USA. He expressed bewilderment at any criticism, emphasizing his commitment to similar advantageous deals for the country and supporting companies that secure them, ultimately aiming to boost the U.S. economy and create jobs.
