Intel stock (NYSE: INTC) is trading higher in US premarkets today after SoftBank announced a $2 billion investment in the beleaguered chipmaker. Separately, the US government is also reportedly considering a 10% stake in the company by converting its Grant under the CHIPS and Science Act into equity.

SoftBank, which vowed to invest $100 billion in the US over four years following a meeting with Donald Trump in December 2024, would invest $2 billion in Intel at $23 per share. “The investment comes as both Intel and SoftBank deepen their commitment to investing in advanced technology and semiconductor innovation in the United States,” said the release.

SoftBank to Invest $2 Billion in Intel

Intel’s CEO Lip-Bu Tan said, “We are very pleased to deepen our relationship with SoftBank, a company that’s at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing U.S. technology and manufacturing leadership.

Tan added, “Masa (SoftBank CEO Masayoshi Son) and I have worked closely together for decades, and I appreciate the confidence he has placed in Intel with this investment.”

For SoftBank, the investment in Intel is a vote of confidence in this turnaround. Son’s statement on the investment – “This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role” – underscores this belief. It aligns with SoftBank’s broader vision of enabling the artificial intelligence (AI) revolution.

SoftBank Owns the Majority Stake in Arm Holdings

The move also brings a new dynamic to the relationship between the two companies. SoftBank, with its majority stake in Arm Holdings, now has a financial interest in one of the primary architects of the x86 architecture, which has long been the dominant rival to ARM in the PC and server markets.

While the two companies have different business models, with ARM licensing its designs and Intel designing and manufacturing its own, SoftBank’s position could lead to interesting collaborative opportunities, particularly in Intel’s foundry business. SoftBank could potentially encourage ARM’s ecosystem of customers to utilize Intel’s manufacturing capabilities, thereby propping up a critical part of Intel’s long-term strategy.

Meanwhile, SoftBank’s $2 billion investment in Intel marks a different, yet complementary, approach. Unlike the ARM acquisition, which was a full takeover, the Intel investment is a financial stake, making SoftBank a top-10 shareholder. It injects much-needed capital into a company that has faced a period of intense competition and financial challenges. Intel, once the undisputed leader in the chip industry, has been working on a massive turnaround plan to regain its manufacturing edge and compete in the lucrative AI and data center markets.

The Trump Administration Is Reportedly Considering Taking a Stake in Intel

Separately, in a move that would mark one of the most significant government interventions in the private sector in decades, the Trump administration is reportedly in discussions to acquire a stake of up to 10% in Intel. The potential investment, which could make the US government Intel’s largest shareholder, is being considered as a way to convert grants from the CHIPS and Science Act into equity, according to sources familiar with the matter.

The discussions center on a bold strategy to bolster domestic semiconductor manufacturing and fortify the U.S. technology supply chain against geopolitical rivals. The CHIPS Act, enacted to revitalize American chip production, has already allocated substantial grants and loans to companies like Intel. However, this proposal would transform a portion of those funds, estimated to be around $10.9 billion for Intel, from a simple grant into a direct ownership stake.

This potential move is seen as a dramatic escalation of the government’s role in a strategic industry, as taking a direct ownership stake in a major, publicly traded tech company is highly unusual, particularly in periods outside wars or major economic crises.

The administration has recently pursued a similar, albeit smaller, path with a “golden share” in U.S. Steel and a stake in MP Materials, which is the only rare-earths producer and processor in the country, signaling a broader intent to create “government-backed national champions” in industries deemed vital to national security.

For Intel, the financial backing would be a significant lifeline. The company has faced a challenging period, falling behind rivals like Taiwan Semiconductor Manufacturing Co. (TSMC) in advanced chip fabrication and Nvidia in the booming AI sector. The potential government investment, alongside a recent $2 billion stake from SoftBank, could provide the capital and political support needed to accelerate its turnaround plan.

Intel is a Crucial Piece for US Manufacturing

Intel is far more than just a chipmaker; it’s a critical component of US manufacturing, economic strength, and national security. As the only leading-edge semiconductor company in the US that both designs and manufactures its own chips, Intel plays an irreplaceable role in the domestic technology ecosystem. This position has become even more vital as the US seeks to re-shore critical manufacturing and reduce its reliance on foreign supply chains.

The ability to manufacture advanced semiconductors domestically is a strategic imperative for the US. Chips are the essential building blocks for virtually all modern technology, from personal computers and smartphones to military hardware and artificial intelligence systems.

Intel is a crucial piece for US manufacturing, especially as demand for AI chips skyrockets amid the AI pivot.

Can INTC Turnaround with the SoftBank Investment?

Intel, which was once the world’s biggest chipmaker, is now a pale shadow of its glorious past.

A lot went wrong with Intel over the last two decades. It made the strategic blunder of turning down the offer to supply processors for the Apple iPhone. The company believed that Apple might not be able to sell enough of these, and it was a tiny market to bet on.

Intel was relatively slow with innovation, and AMD gradually gained market share in the PC market. Apple, too, stopped using Intel chips for its Mac and instead pivoted to its own chips.

Intel was pivoting to the foundry model and hoped to make chips for other chip designers. However, despite burning billions of dollars on that business, Intel hasn’t been able to secure enough clients for its foundries.

Despite being the biggest beneficiary of the CHIPS Act, Intel has not yet been able to turn the corner, even as the turnaround remains a work in progress. While Intel stock has seen some upward momentum in recent days, it trades at a fraction of its all-time highs, even as Nvidia has become a 4 trillion-dollar behemoth riding the AI euphoria.