The Trump administration has expanded its industrial investment holdings this week, with six semiconductor companies signing letters of intent to receive government funding in exchange for minority, non-controlling equity stakes. According to a tally by Cato Institute analyst Ted DeHaven, these new agreements are expected to be finalized in the coming months, bringing the total number of companies with government equity stakes to 30.
DeHaven stated this week: "The most notable aspect of this announcement is that government equity ownership is becoming commonplace." All funding for this round comes from the 2022 CHIPS and Science Act, with subsidies totaling up to $874 million allocated for building new infrastructure to support advanced computing and artificial intelligence capabilities.
The list includes six semiconductor firms: Kepler, MultiBeam, ExoPix, New Electronics, Obsidian Semiconductor, and Eluma. Additionally, GLOBALFOUNDRIES Inc. (GFS), which separately reached a quantum chip cooperation agreement with the U.S. government in May, is now eligible for a second round of subsidies.
U.S. Commerce Secretary Howard Lutnick stated in the announcement: "These strategic investments will strengthen domestic industrial capacity, create high-wage jobs, and ensure the United States maintains a leading position in the global semiconductor industry."
The CHIPS and Science Act was approved in 2022 and signed into law by former President Joe Biden. Under the Biden administration, funding from the act was distributed as non-repayable grants without requiring equity stakes. The Trump administration has completely reversed this approach, with 18 semiconductor industry companies now having agreements that include equity provisions as part of their subsidy packages.
Chips are just one component of the U.S. government's diversified industrial equity portfolio, which also covers quantum computing, steel, nuclear power, and rare earth minerals. In May, the government invested additional funds in several quantum technology companies—including a new project allocation for Intel (INTC)—again using equity as consideration, despite market skepticism about the short-term commercial viability of the quantum industry.
Over the past year, all of Trump's investment moves have prioritized national security, targeting both profit returns and support for strategic industries. When approving Nippon Steel's acquisition of U.S. Steel, the government obtained a golden share (a veto-privileged special share) in U.S. Steel. It also holds an 8% equity stake in Westinghouse Electric's nuclear power company.
Among all investments, Intel (INTC) has been the most notable. Since the investment was finalized last August, shares of the U.S. chip giant have repeatedly hit all-time highs, with the U.S. government's paper profit exceeding $70 billion. Trump has publicly and repeatedly touted this investment. Trump recently posted on Truth Social: "Congratulations to all Americans—we have completed an extremely successful investment."
Over the past year, the U.S. has gradually taken equity stakes in several rare earth companies, including permanent magnet material manufacturer Vulcan Elements, mining company MP Materials, and U.S. Rare Earths. Overall, the Trump administration holds 5% to 15% equity stakes in at least five rare earth companies. The cooperation model in the rare earth sector is highly consistent with this round of semiconductor subsidies: the government provides grants to smaller, riskier startups in exchange for equity.
Bill Frauenhofer, executive director of semiconductor innovation and investment at the U.S. Commerce Department, stated that this round of subsidies is designed to give companies sufficient bandwidth and energy efficiency advantages to safely and quickly execute large-scale, complex AI computing tasks. If all letters of intent are finalized, total subsidies of $874 million will be distributed among Kepler, MultiBeam, ExoPix, New Electronics, Obsidian Semiconductor, and Eluma, with individual company subsidies ranging from $30 million to $245 million.
GLOBALFOUNDRIES Inc. (GFS) received the highest subsidy in this round. In addition to the $375 million grant already secured in May, it can now receive up to an additional $300 million in government funding. GLOBALFOUNDRIES Inc. previously disclosed that the first round of subsidies in May corresponded to approximately a 1% government equity stake. The specific government equity percentages for the six chip companies in this round have not yet been disclosed.
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