The Trump Administration Should Refrain From Taking Equity in Semiconductor Companies
The Trump administration should not proceed with potential plans to take a 10 percent equity stake in Intel (or other semiconductor companies) through the conversion of CHIPS Act grants. This would dilute the very purpose of offering the grants in the first place.
The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act—which was conceptualized during the first Trump administration, passed on a bipartisan congressional basis, and enacted by the Biden administration in August 2022—appropriated $39 billion in grants designed explicitly to reduce the cost gap with other nations to make it economically feasible and sensible to manufacture semiconductors in the United States.
The legislation recognized the reality that building a new semiconductor fab in Asia is about 30 percent less expensive than building one in the United States (and it’s about 50 percent cheaper in China). The grants level the playing field by offsetting the incentives other nations provide to attract globally mobile semiconductor manufacturing activity. Indeed, one study found that the 10-year total cost of ownership (TCO) of U.S.-based semiconductor fabs is 25 to 50 percent higher than in other locations. Foreign government incentives account for 40 to 70 percent of that gap.
Intel has been set to receive $7.9 billion of CHIPS Act grants (although as of August 2025 it had actually received only $2.2 billion). But now if the U.S. government wants a 10 percent stake for those monies, Intel would have to issue new shares to the government, which would dilute the value of Intel stock, and make it more difficult or more expensive for Intel to raise additional capital through equity issuance in the future. This would thus counteract the CHIPS Act goal of strengthening the hand of U.S. chip manufacturers and thus the extent of semiconductor manufacturing activity in the United States.
Unfortunately, it has taken far too long to distribute CHIPS Act funds. While the Biden administration awarded well over 90 percent of the CHIPS grants, by that administration’s conclusion only $4.3 billion of the funds had actually been disbursed. In part, as ITIF has written, that was because completion of the contracts was slowed by inclusion of a whole host of provisions—such as assessing whether the applicant had developed “a plan for access to child care for facility and construction workers” or promoting “community investments” including “financing or building affordable housing or providing housing vouchers”—that were wholly extraneous to the goal of turbocharging U.S. semiconductor manufacturing.
But if the prior administration using the CHIPS Act to promote social policy (such as mandated day-care centers) wasn’t the right approach, nor is the current administration leveraging the Act to promote fiscal policy (i.e., trying to get taxpayer return on equity stakes). The CHIPS Act’s central and critical goal is to increase U.S. semiconductor manufacturing activity. The program works as designed and intended—the Trump administration should stay focused on executing it.
