The Journal. - Inside Intel's Deal With the U.S. Government

Episode Date: August 27, 2025

The U.S. government is taking a 10% stake in Intel, a deal that caps a two-week frenzy for the troubled chip maker and marks the latest in a series of extraordinary private-sector interventions by President Trump. WSJ’s Robbie Whelan peels back the curtain on the unprecedented deal and shares details from the Oval Office meeting between Intel and the Trump administration. Jessica Mendoza hosts.   Further Listening: - How Intel’s CEO Became a Political Liability- Is American Capitalism in Retreat?- The Nvidia CEO’s Quest to Sell Chips to ChinaSign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

For the past few weeks, Intel, the American Chips Company, has been on a roller coaster. Our colleague Robbie Whelan has been covering it. It's really been a wild and crazy ride, and I'm happy to tell you all about it. It started earlier this month with a post from President Trump calling for Intel CEO Lip Bhutan to resign over business ties in China. It says, the CEO of Intel. is highly conflicted, capital letters conflicted, and must resign immediately. Tan quickly tried to put out the fire, flying to Washington to meet with the president in the Oval Office. And they have this, like, hour-long meeting where he basically says, look, my ties to China are in the past.

About a week later, Intel announced a major deal with the Trump administration. Friday was like the culmination of a total roller coaster ride for Intel. And I said, I think it would be good having the United States as you partner. He agreed. And they've agreed to do it. And I think it's great. Under the agreement, the U.S. government becomes a partial owner of Intel. It's getting a 10% stake in the company.

And Robbie has the inside story on how it all went down. And President Trump, kind of like in a half-joking, half-serious way, said, maybe I should put my signature on these papers, too. I've actually seen the papers. He put his name in big letters, Donald Trump. So he's very pleased about this. And I think it's a great deal. He walked in, wanting to keep his job,

and he ended up giving us $10 billion for the United States. So we picked up $10 billion. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, August 27th. Coming up on the show, Inside Intel's Deal with the U.S. government. When you're with Amex Platinum, you get access to exclusive dining experiences and an annual travel credit. So the best tapas in town might be in a new town altogether.

That's the powerful backing of Amex. Terms and conditions apply. Learn more at amex.ca.ca slash yamex. Behind the blockbuster deal granting the U.S. government a 10% stake in Intel, there is a whole cast of characters. It's a little bit hard to keep track of how many people are in. involved here, but would you want to hear the dramatist persona? Sure, the dramatist persona.

So, okay. So there's a cast of characters here that's very interesting and it involves some of the most powerful people in the world. There's Intel CEO Lip Bhutan. He's a Malaysian-born, Singapore raised, U.S. citizen, but he has some Chinese heritage, and he's very close with a lot of businesses and a lot of officials in China. There's, of course, President Trump. Just took office, wants to make American manufacturing great again, has this really specific America-first industrial agenda that he's been pushing.

And Howard Lutnik, the Commerce Secretary. He's a former banker. He's one of Trump's most trusted deputies, and he is responsible for doing a lot of the deals that the president has been orchestrating. And there's also Tom Cotton, a Republican senator from Arkansas. He's been very vocally critical of China and the idea of us selling technology, especially technology that can be used in combat situations to the Chinese.

And he's been very critical of companies that do that. For this story, Robbie and our colleagues at the Wall Street Journal spoke to current and former Intel executives, people in the White House, lobbyists, and company advisors. One of the things Robbie learned was this whole series of events started while Trump was watching TV. On Thursday, August 7th, Donald Trump was doing a thing that he loves to do in the morning, which is he watches his favorite cable news shows,

and he gets a lot of ideas from these shows. The show he was watching that particular morning is called Mornings with Maria. It's on the Fox Business Network. It's hosted by Maria Barturomo. But look at Intel and how far it has fallen. And Barturomo was talking about Tom Cotton, the senator from Arkansas,

and a letter he has recently written and made public to Intel's board. Tom Cotton is pressing the board of Intel right now about its new CEO and his potential ties to communist China. In Cotton's letter to Intel's board, he called out Tan's previous job as CEO of a company called Cadence Design Systems. Earlier this year, Cadence pleaded guilty

to selling banned technology to a Chinese National Defense University. The company has since settled with the Justice Department. Those sales happened while Tan was CEO. The president is listening. He's tuned in. And he hears this. And then if you look at the time stamps on it, it's really remarkable. Five minutes after the segment runs, he goes on to Truth Social, and he posts this really dramatic message. The message was that Tan should resign. In a public statement about his previous company, Tan said, quote, we are engaging with the administration to address the matters that have been raised and ensure they have the facts. Trump's post came just five months into Tan's tenure as Intel CEO. It was also a time when the company was trying to come out of a long-time rut.

Intel is in what can only really be described as sort of a multi-year downward spiral. Intel has struggled to keep up with other chip giants like NVIDIA and Taiwan Semiconductor Manufacturing Company, or TSM. While these chip companies decided to specialize in either designing chips or manufacturing them, Intel tried to keep doing both, and it lost an edge in both markets. As a result, over the last few years, Intel's stock has plummeted, and it's lost out on billions of dollars. The company brought in Tan earlier this year to try to write the ship. And so the hope it sounds like with Intel turning to Tan as CEO was that we need something to end this period of chaos. And so five months in, when Trump calls for Tan to resign, I mean, what was the reaction?

My understanding is it was full-blown panic. It was the board starts freaking out. He is very rattled by this. They immediately reached out to Susie Wiles, the chief of staff at the White House and said, look, we've got to talk to the president about this. The company set up a meeting with Trump just a few days later. And before that meeting, Tan strategized with his team. And he's huddled with his advisors.

in this kind of state of frenzy and nervousness and anxiety, and he's getting this advice from the other season. What should I do? How can I get the president to back off and stop criticizing me publicly? Because you have to understand that a sitting president calling for a CEO of a major American company to resign in public is pretty unprecedented. So his advisors tell him, they say, listen, you've got to do two things. Number one, you've got to convince him you're not a Chinese spy because that's essentially what you've been accused of. And number two, you've got to convince him that it's in his interest long term to make sure that Intel does not fail

and come to some sort of arrangement where the government's fortunes and Intel's fortunes are tied together. And they say to him, you know, don't worry, he will hear you out. He might have called for you to step down, but President Trump loves talking to CEOs. I mean, it's his world, right? That's Trump's world or CEOs and high-profile, like, billion-dollar businesses. He envisions himself as this sort of master dealmaker, and he likes being around people who he sees as also smart dealmakers. He thinks that they're of his tribe. And so Tan calms down a little bit, and he understands what he has to do.

So Tan goes to the Oval Office for this meeting. How did it go? What did he say? I was told that he told the president, I went to China years ago, and I became the most successful venture capitalists in China. I was very, very successful there. And the way he said that is important. He didn't just say, oh, I used to work in China. He said, I was very successful in China.

The other thing that's important to know is that he didn't go in and say, look, I'm head of a multinational company. We need to be treated as such and given the leeway to operate in whatever country we want. And basically said, I think that Intel is a great American company. I'm very dedicated to it. And I'm also very dedicated to your approach to manufacturing, to reshoring jobs in the manufacturing sector, to making American factories, great again. He really signed on. He gave his... He spoke Trump's language. He gave his endorsement to the president's plan, and this meeting went fantastically well. At the end of it, Trump said, look, I'm not going to give

you any more grief about stepping down. I'll back off. Along with Trump and Tan, other members of Trump's cabinet were there, including Commerce Secretary Howard Ludnik. And so going into that meeting, sounds like Tan was going in there trying to make sure that he kept his job and that Intel was in the good graces of the Trump administration of President Trump. What about the Trump administration? What did they think they would get out of that meeting? Well, that's a really good question. So Secretary Lutnik has been on this sort of interesting project recently, which is that, so the Trump administration views the Chips Act, this deal that gave billions of dollars to Intel as a Biden

project. And they're not fond of the idea of continuing to just sort of ride this train that the Biden administration set up for the tech sector. The Chips Act allocated billions of dollars to multiple chip companies, not just Intel. TSM and Samsung got billions too. Among other things, that money was supposed to encourage the companies to make chips in the U.S. But the Trump administration wanted more than just domestic manufacturing investments from these companies. That's after the break. It's Rona Week. Now until Wednesday, rain or shine, you can always be building yourself a better summer.

So, head over to Rona and save 30% on SICO endurance interior paint. Give that room you keep saying needs a fresh coat of paint, a fresh coat of paint. Build it right, build it Rona. Conditions apply, details in store, and more offers at rona.ca. I said interior paint, right? The person in charge of figuring out how to get better deals from chip companies was Howard Lutnik. Secretary Lutnik has been going around and making the rounds with these companies that got these grants and saying, look, would you mind committing to bigger investments in the U.S.?

We know that you are committed to bringing more jobs here, but we'd like you to, we'd like to see more from you. So he's been going around trying to put his own personal stamp on the Chips Act, sort of redo some of these deals, retrade some of these deals that they struck with the previous administration. But his team had a hard time figuring out what the U.S. could get from Intel, because the company has been in a downward spiral. And so he looked at Intel, or his team looked at Intel, and said, I wonder if we could get the same kind of increased commitment out of Intel. and the answer they came to was no. Intel is in such bad shape. They probably can't even, even if we asked them for a smaller,

you know, small increase in their commitment to manufacturing investment in the U.S., they probably wouldn't even be able to do it. They're in that bad a shape. And so what he wanted from this meeting was to come to some sort of arrangement where he could do the equivalent of what he did with these other companies like TSMC

and sort of, you know, make sure that he was comfortable that the Chips Act money was serving taxpayers well and that the money they were giving Intel, the government was going to see some kind of good return on it. And the solution they came to was, look, we should be getting a share in this company. So when the company profits, eventually we hope,

we will share in that profit as well. There shouldn't be just a free lunch. Here's Letnik in a video he posted to X, announcing the deal with Tan. And we agreed that it would be fair that the same money that you give a company, America should have shares for it because it's just fair. So when Trump first said

Tan should resign, was it really about China? Or was Trump trying to get intel to come to the table? That's the right question to ask. From my reporting, what I've been told by actually both sides, is that regardless of whether or not Donald Trump actually wanted Lip Bhutan to resign over his China ties, what he sent out in that message on Truth Social, on Thursday morning was an opening bid for these discussions.

So making what essentially amounted to a threat against the CEO, I'd like you to resign. I think you need to step down. You're too conflicted. That was a really good way for him to arrive at the negotiating table with a distinct advantage over his partner. As for the details of the deal, the U.S. will convert the nearly $9 billion in grants

that had already promised Intel into that 10% stake in the company. This makes the U.S. government Intel's largest shareholder. How has the CEO of Intel talked about this deal? He's been fairly cagey about it, except to say that he is very excited to work with the government as a partner. He is all in on the president's manufacturing agenda. This is a big, important historical agreement that we can work together. And more important, I don't need the grant, but I really do. look forward to have the U.S. government be my shareholder,

and we can work together and make Intel great again. And what does it mean for the U.S. to have a stake in Intel? Is Lutnik going to be going to board meetings? So the administration has said that the government will not have a seat on the board and will not be directly involved in governance decisions. The president has sort of pledged at this point to kind of stay out of Libutan's way, to not sort of make demands. But you can sort of tell that behind the scenes,

there's going to be a relationship where it's like if the government feels like it needs to exert pressure on this company, things aren't going well, they're going to have an open line of communication with Intel's management to sort of make their voice heard. And there's one other thing folded into the deal. What they did was they put this provision in the deal that I'm told is viewed by both Intel and the White House as what's called a poison pill. A poison pill. One that would incentivize Intel. to keep its domestic chip-making business. Because the provision says that if Intel loses at least 51% of its manufacturing business, the U.S. government will receive an additional 5% of the company at a discounted share price. That scenario would further dilute the value for investors and complicate the company's finances.

But there are benefits for Intel, too. The U.S. government could send more customers its way. So there's a sense, a real sense, that the next step is the Trump administration, is going to maybe urge or lean on some of the other big tech companies out there to use Intel as their manufacturer. And our reporting shows that that is part of the plan going forward. The Trump administration is going to do as best to help Intel find some customers for this manufacturing capacity that the government's asking them to build out. Could the U.S. try to make deals like this with other companies that received money from the Chips Act?

Yes. First of all, President Trump has said that he would like to make more deals like this. this. But there was a brief panic when news started to leak of the Intel stake, a lot of the other companies in the same industry, for example, TSM kind of started to get worried. And we started hearing about this. Like, you know, who's next? Are they going to take us over next? Are they going to take shares in our company? Are they going to make us enter some deal that is dilutive to our shareholders? And there was a serious concern about that. So much so that Secretary Lutnik came out a few days ago and said, look, anybody who has sort of worked with us come to the table and complied with what we're trying to do on the Chips Act specifically, they should not worry.

What does this moment tell us about how the Trump administration views the relationship between government and business? Yeah, I think that CEOs of companies, especially in the tech sector, if they hadn't gotten the message by now that this is an administration that wants very badly to be, involved to have a say and in some cases this is the extreme case right even own a big stake of their companies now they know now they know that that's the strategy or at least one of the strategies that the Trump administration is willing to to employ to kind of make sure that their agenda succeeds That's all for today, Wednesday, August 27th. The Journal is a co-production of Spotify and the Wall Street Journal.

Additional reporting in this episode from Josh Dossi, Nicholas G. Miller, Amrith Ram Kumar, and Lauren Thomas. Thanks for listening. See you tomorrow.