U.S. shares rose 7% on Thursday, with a further 2.6% gain after hours, while Frankfurt-listed shares climbed 3.6% on Friday. Investors are betting that government backing could provide much-needed stability for the struggling chipmaker.

The potential investment was first reported by Bloomberg, noting discussions that followed an 11 August meeting between President Donald Trump and Intel’s Chief Executive Officer, Lip-Bu Tan. 

The talks reportedly focused on how Washington could accelerate domestic semiconductor manufacturing, with the delayed Ohio mega-fab project expected to be a central part of the plan.

The development comes amid one of Intel’s most challenging periods in decades. The company posted a $2.9 billion net loss in the second quarter of 2025, driven by $1.9 billion in severance costs and $800 million in asset impairments. 

A restructuring plan has seen 25,000 jobs cut and major chip fabrication projects in Germany, Poland, and Ohio scrapped or delayed.

Trump’s involvement with Intel has been far from smooth. Days before the reported stake talks, he called for Tan to resign over what he described as “highly conflicted” ties to Chinese firms. 

His comments followed a letter from Senator Tom Cotton, alleging Tan’s investments in over 100 Chinese technology companies, including at least eight linked to the People’s Liberation Army.

Tan’s past leadership of Cadence Design Systems has also resurfaced in political debate. In July 2025, the company admitted to illegally exporting chip design software to a Chinese military university, paying $140 million in fines.

Despite political issues, Intel aims to continue cooperating with the White House. “Intel is deeply committed to supporting President Trump’s efforts to strengthen U.S. technology and manufacturing leadership,” a company spokesperson said. 

“We look forward to continuing our work with the Trump Administration to advance these shared priorities, but we are not going to comment on rumours or speculation.”

Tan has also made it apparent that there will be no return to unchecked spending. “There are no more blank cheques. Every investment must make economic sense,” he said.

Intel has already secured nearly $8 billion in federal subsidies through the CHIPS and Science Act, placing it among the largest beneficiaries of U.S. semiconductor funding.

Analysts suggest a direct government stake could help stabilise Intel’s finances and restore competitiveness against rivals Nvidia, AMD, and TSMC.

Recently, Intel has been losing investors’ trust and having internal issues in its manufacturing and design operations. The company has brought in Lip-Bu Tan to help resolve this.

Tan, a veteran of the semiconductor industry, previously served as CEO of Cadence Design Systems and was a member of Intel’s board until August 2024. His experience in both chip design and venture capital places him as a strategic choice to scale up Intel’s ongoing transformation. 

Following the announcement, Intel’s shares surged by 12% in extended trading, showing that investors are confident about his leadership.

In a letter to employees, Tan acknowledged the challenges ahead while stating that Inte has the ability to regain its competitive edge. “Together, we will work hard to restore Intel’s position as a world-class products company, establish ourselves as a world-class foundry and delight our customers like never before,” he stated.

Intel has been under pressure to adapt to the fast-changing semiconductor market, particularly as competitors such as Nvidia and TSMC continue to dominate the sector. 

The company’s efforts to expand its contract manufacturing business have brought issues about cash flow, with reports indicating that players in the space, including Broadcom and TSMC, have explored potential partnerships or acquisitions of Intel’s assets.

Analysts have welcomed Tan’s appointment, stressing his technical expertise and deep industry connections as key assets.

Jack E. Gold, an analyst at J. Gold Assocommented, “Tan has an intrinsic understanding of the semiconductor industry, both from a product design aspect as well as the needs of enabling chip manufacturing—an area that Intel Foundry needs help in making their tools more user-friendly and accessible for potential customers.”

Tan’s leadership arrives at a time of geopolitical tensions affecting the semiconductor industry. The United States government has pushed for increased domestic chip production, with former President Donald Trump advocating for policies that could reshape global supply chains. 

While Intel stands to benefit from government incentives, the company must also contend with growing competition from Asian manufacturers.

Nonetheless, analysts believe the appointment of Lip-Bu Tan shows that Intel is ready to maintain its current structure rather than split its design and manufacturing operations.