(A)Political - August 23rd

Good morning everyone,

It’s been a busy week in D.C.. Let’s get into it!

The government will finalize and disclose terms of its 9.9% non-voting Intel stake funded via CHIPS conversion, then track execution markers—fab build timelines, node migration, and anchor foundry customers—to judge whether the equity template extends to other semiconductor deals. With the Sept. 1 rollback in place, Ottawa will implement tariff removals on USMCA-covered consumer goods, open sectoral talks with Washington on steel, aluminum, and autos, and shape its spring 2026 USMCA review agenda while keeping targeted levies in place pending resolution. State will issue consular guidance on the pause of H-2B trucker visas as DOT and FMCSA advance crash and compliance inquiries, tighten English-proficiency and licensing enforcement, and carriers adjust hiring and training while processing volumes and any visa revocations are monitored.

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US Takes 10% Intel Stake

_{By: Atlas}

The U.S. government finalized an agreement to acquire 433,323,000 shares of Intel common stock—about 9.9% of the company’s fully diluted shares—in exchange for the release of nearly $8.87 billion in previously awarded but undisbursed CHIPS and Science Act funds; the shares are non-voting and do not carry a board seat. Intel confirmed the structure, and officials framed the move as a bid to stabilize and retool a strategically important manufacturer. Market reaction was immediate: Intel stock rose roughly 5%–7% after the news. President Donald Trump called it “a great deal for them,” while Commerce Secretary Howard Lutnick cast the equity swap as a way to secure a direct taxpayer return from CHIPS incentives.

How the deal came together

Talks accelerated following an August meeting at the White House between Trump and Intel CEO Lip-Bu Tan, which itself followed the president’s public call for Tan’s resignation over past investments alleged to involve China-linked firms. By August 22, Trump said Intel had agreed to the equity arrangement and would proceed on terms the administration had sought. The announcement came on the heels of a separate $2 billion investment in Intel by SoftBank—described as a vote of confidence during a difficult stretch for the company. Lutnick publicized the outcome with a post stating, “The United States of America now owns 10% of Intel,” and citing national-security and economic rationales.

Funding source and policy context

The stake is financed by converting remaining CHIPS Act grants into equity, shifting from the prior model of pure subsidies to a structure intended to yield a financial return to the government. Reporting varies slightly on totals—figures referenced range from about $7.9 billion to nearly $8.9 billion—but officials and company statements align that the source is unspent CHIPS funds previously awarded to Intel, supplemented by other federal programs. The administration describes the shares as non-voting, with no governance seat; officials emphasize the aim is to catalyze domestic leading-edge manufacturing rather than micromanage company operations. The approach sits alongside other interventions: revenue-sharing arrangements that collect 15% of China-bound AI-chip sales from Nvidia and AMD, a “golden share” embedded in the Nippon Steel–U.S. Steel transaction, and a Defense Department equity position in MP Materials.

Industry implications and market reaction

Intel’s challenges provide the backdrop. After years of execution issues and a missed mobile and AI cycle, the company’s market value lags far behind Nvidia’s, and its foundry unit has struggled to attract marquee customers. Analysts say federal backing improves Intel’s balance-sheet capacity to build advanced fabs but caution that capital alone will not resolve technology and customer-pipeline gaps; several note the company still needs credible, high-volume commitments to fill new capacity. As an initial marker, shares moved higher on the news; separate reporting flagged the recent SoftBank infusion as additional runway for a turnaround. The administration and Intel both position the stake as part of a broader push to regain domestic leadership in leading-edge logic design and manufacturing.

Terms, precedents, and open questions

Several deal points set the frame for what comes next. First, the equity is non-voting and confers no board seat; officials also indicated the government would be a passive owner. Second, some accounts specify a per-share price point of $20.47—below the day’s close near $24.80—implying an immediate paper gain; other coverage focuses on the total share count and the 9.9% threshold. Third, funding references include CHIPS awards and, in some reporting, additional federal programs such as “Secure Enclave.” While rare, the move is not without precedent: the government took a majority stake in General Motors during the 2008 crisis before exiting at a loss years later. The Intel position, by contrast, is designed as a passive, minority holding pursued in service of semiconductor capacity and supply-chain resilience.

Critiques have surfaced across the policy spectrum. Free-market voices warn that even a passive federal stake may skew competition—if customers assume buying from Intel curries favor with regulators—or entangle corporate decisions with political timelines. Others argue that market risks remain: if technology execution slips or fabs under-utilize, taxpayers share downside while governance rights stay limited. Supporters counter that the alternative—grant funding with no financial claim—offered no direct return, and that semiconductor capacity and know-how are strategic assets justifying a different policy toolkit. Observers will watch how Intel’s foundry customer roster evolves and whether the equity template appears in additional CHIPS-related deals.

What to watch

Regulatory and disclosure milestones come first: confirmation of final share issuance, any warrants or ancillary rights, and any conditions attached to future federal disbursements. Analysts also point to execution markers: fab construction timelines, node-migration roadmaps, and concrete customer wins that translate capital into revenue. In parallel, policy signals matter. Officials have said companies already scaling U.S. investment—such as TSMC and Micron—will not be pressed for similar stakes, but the administration has called this arrangement a model, raising questions about where else it could apply. Finally, geopolitical context will shape outcomes: export-control policy on AI hardware, revenue-sharing for China sales, and federal procurement choices could all influence Intel’s ability to fill domestic capacity at competitive yields and margins.

Bottom line

Washington’s 9.9% passive stake in Intel represents a shift from grants-only industrial policy to equity-based participation designed to align taxpayer exposure with national-security priorities in semiconductors. The structure—non-voting shares, no board seat, conversion of awarded CHIPS funds—seeks to balance financial discipline with speed. Success will be measured less by the day’s stock pop than by whether new U.S. capacity comes online on schedule, leading-edge process nodes prove competitive, and anchor customers commit wafer volumes that put the fabs to work. The government, meanwhile, has staked a balance-sheet share in that outcome, signaling a willingness to use ownership—however limited—to push for durable domestic capability in a sector treated as vital infrastructure.

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