Topline
Key semiconductor stocks slid in Asia and the U.S. in premarket trading Wednesday, following a report the Trump administration may seek equity in any such firms awarded federal grants under the Biden-era CHIPS Act.
Lutnick said the government want to acquire an equity stake in Intel in exchange for grants earmarked under the CHIPS Act.
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Key Facts
According to Reuters, Commerce Secretary Howard Lutnick is considering a plan in which the U.S. government will gain equity stakes in chip-producing companies in exchange for grants given to them under the CHIPS Act.
In an interview with CNBC on Tuesday evening, Lutnick specifically named Intel and said, “We should get an equity stake for our money…which was already committed under the Biden administration.”
Although Lutnick did not offer specifics, White House Press Secretary Karoline Leavitt told reporters on Tuesday that the deal being worked on with Intel could see the government gain a 10% stake in the chip maker.
The Reuters report noted that Lutnick could expand this condition to other companies that are set to receive grants under the CHIPS Act, including the likes of Micron, TSMC and Samsung.
The report added that much of the grant money earmarked for these companies under the CHIPS Act has not yet been disbursed.
How Have The Markets Reacted?
Intel’s shares fell more than 1% to $25.02 in early trading Wednesday after surging nearly 7% on Tuesday. Shares of AMD, which fell more than 5.4% on Tuesday, were down 1.4% more in the premarket. Micron’s shares fell 5.16%. In Asia, TSMC’s Taipei-listed shares fell 4.2% to $37.51(TWD 1,135), while Korean chip-making giant SK Hynix dropped 2.9% to $182.74 (KRW 255,500).
What About Nvidia’s Shares?
Nvidia’s shares inched up to $175.85 in early trading on Wednesday, rising 0.1%. Unlike Intel and AMD, Nvidia hasn’t received any grants under the CHIPS Act, as it doesn’t make its own chips and instead relies on companies like TSMC and Samsung.
What Has Trump Said About The Chips Act?
President Donald Trump has repeatedly bashed the Biden-era CHIPS Act and has threatened to scrap it. In his address to a joint session of Congress in March, the president said the CHIPS Act was a “horrible, horrible thing,” adding: “We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money, and they don’t spend it.”
Crucial Quote
Lutnick told CNBC earlier: “The Biden administration literally was giving Intel for free, and giving TSMC money for free, and all these companies just giving them money for free. Donald Trump turns that into saying, ‘Hey, we want equity for the money. If we’re going to give you the money, we want a piece of the action.’”
Tangent
Earlier on Tuesday, Japanese investment giant SoftBank announced it had agreed to a deal to purchase $2 billion worth of Intel stock at $23 per share.
Further Reading
US examines equity stake in chip makers for CHIPS Act cash grants, sources say (Reuters)