U.S. weighs equity stakes in chipmakers tied to CHIPS Act funding - report

U.S. Commerce Secretary Howard Lutnick is contemplating federal equity stakes in semiconductor companies eligible for CHIPS Act funding, aiming to bolster domestic manufacturing and economic security.

Discussions involve potential government investments in major firms like Intel, Micron Technology, TSMC, and Samsung Electronics, with a notable proposal for the government to acquire a 10% stake in Intel.

While endorsing this equity investment model, Lutnick emphasizes that the government does not intend to control these companies, marking a significant shift in U.S. corporate influence during non-crisis times.

The CHIPS Act has $52.7 billion remaining to be allocated, with significant prior subsidies granted to companies like Samsung, Micron, and TSMC, as the Commerce Department reassesses certain previously approved grants.

Recommendation Rating: Strategic Engagement in Semiconductor Industry

U.S. Commerce Secretary Howard Lutnick is currently deliberating the possibility of the federal government acquiring equity stakes in semiconductor firms that are eligible for funding under the CHIPS Act for establishing manufacturing facilities within the United States. This information comes from sources familiar with the ongoing discussions, as reported by Reuters.

The dialogue builds upon an initiative that would see the government invest in Intel (INTC) in exchange for cash grants, according to a White House official and another informant. Lutnick is also considering whether to extend similar investment opportunities to companies such as Micron Technology (NASDAQ:MU), Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE:TSM), and Samsung Electronics (OTCPK:SSNLF).

Lutnick has been advocating for this equity model, which has the support of former President Donald Trump. Treasury Secretary Scott Bessent is participating in these discussions, but Lutnick is spearheading the initiative.

It is noteworthy that a significant portion of the $52.7 billion allocated under the CHIPS Act has yet to be distributed. After Intel, Micron stands as the largest beneficiary of these funds.

White House Press Secretary Karoline Leavitt confirmed on Tuesday that negotiations are underway with Intel regarding a deal that could grant the government a 10% ownership stake in the company. She stated, “The president aims to prioritize America’s needs in terms of national security and economic health; this is a creative proposition that has not been attempted before," during a press briefing.

Speaking on CNBC, Lutnick indicated that the intention of Washington is not to control Intel's operations. Nonetheless, any investment by the government could signify a historic shift in U.S. influence over leading corporations, a move that has generally been reserved for times of economic crisis.

Last year, the Commerce Department finalized substantial subsidies amounting to $4.75 billion for Samsung, $6.2 billion for Micron, and $6.6 billion for TSMC to enhance semiconductor production capabilities in the U.S.

In June, Lutnick remarked that the department was reconsidering some grants that had been allocated during the administration of former President Joe Biden, labeling them as “overly generous.” He noted that Micron had proposed to augment its planned investments in light of this reassessment.