US Considers Equity Stakes in Chip Firms for CHIPS Grants

• The Commerce Department may seek non-voting shares in chipmakers like Intel in exchange for federal funding under the $52.7B CHIPS Act.

Shift in Strategy for CHIPS Act Implementation

The U.S. government is exploring a new approach to distributing funds under the CHIPS Act, which was designed to boost domestic semiconductor manufacturing. Commerce Secretary Howard Lutnick has proposed acquiring equity stakes in companies such as Intel in return for cash grants. This marks a departure from previous practices, where grants were awarded without ownership conditions. According to sources, the idea is gaining traction within the Trump administration and could extend to other firms.

Lutnick’s comments suggest the government is seeking a financial return on its investment, rather than offering unconditional support. He emphasized that any equity stake would be non-voting, meaning the government would not influence corporate decisions. The proposal aligns with broader efforts to prioritize national economic interests. Treasury Secretary Scott Bessent is reportedly involved in the discussions, although Lutnick is leading the initiative.

Industry Reaction and International Implications

Several major chipmakers, including Micron, Samsung, and Taiwan Semiconductor Manufacturing Co. (TSMC), have yet to receive their CHIPS Act funding. While Intel and TSMC declined to comment, Taiwan’s Economy Minister Kuo Jyh-huei acknowledged the proposal and said further consultation would be needed. He noted that TSMC is a private entity and any decision would require input from the National Development Council, a shareholder in the company. The minister stressed that the implications of Lutnick’s remarks must be carefully assessed.

The proposal has raised concerns among critics who argue that government involvement in corporate equity introduces new risks. A poorly performing investment could result in losses for taxpayers. Nonetheless, the administration views the move as a way to ensure accountability and long-term value. The Pentagon has already taken similar steps, becoming the largest shareholder in a mining firm to secure rare earth magnet production.

Broader Context and Market Impact

The CHIPS Act, formally known as the CHIPS and Science Act, allocates $52.7 billion to support semiconductor research and manufacturing in the U.S. Much of this funding remains undistributed, prompting calls for more strategic deployment. Lutnick’s equity-based model reflects a shift toward performance-linked support, rather than blanket subsidies. President Trump has previously criticized the CHIPS Act, calling it inefficient and wasteful.

Recent developments have added complexity to the situation. SoftBank Group announced a $2 billion investment in Intel, signaling renewed interest in the company despite past management challenges. Lutnick contrasted this with earlier policies, stating that the Biden administration had offered grants “for free” without securing any ownership. The new proposal aims to change that dynamic by giving taxpayers a stake in funded enterprises.