The stock of Intel (INTC) is up 7% on media reports that the Trump administration might take a stake in the U.S. chipmaker.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Intel is currently the only American company with the capacity to manufacture the fastest microchips and semiconductors within the U.S., although rival Taiwan Semiconductor Manufacturing Co. (TSM) has factories in the U.S.
U.S. President Donald Trump has called repeatedly for more microchips and high-end technology to be manufactured in the U.S., and there are now reports that the U.S. government is considering taking a stake in Intel and potentially the chip foundries it is building in America, notably in Ohio.
CEO Meeting
Reports that the U.S. government might take a stake in Intel come days after CEO Lip-Bu Tan met with President Trump at the White House. The president had called for Tan to resign as Intel’s CEO over allegations he has ties to China. Tan disputes the allegations and has sought to reassure the Trump administration of his commitment to Intel and America.
Intel’s nascent foundry business has yet to secure a major customer, which would be a critical step in moving towards expansion and giving other potential customers the confidence to turn to Intel for microchip and semiconductor manufacturing. Currently, about three-quarters of the chips in the world are produced by Taiwan Semiconductor Manufacturing Co.
This is the latest example of the U.S. government taking a stake in private sector companies. Earlier this year, the Pentagon bought a $400 million equity stake in rare-earth miner MP Materials (MP). The government also took a stake in U.S. Steel as part of a deal to allow Japan’s Nippon Steel (NISTF) to buy that company. INTC stock is up 19% this year.
Is INTC Stock a Buy?
The stock of Intel has a consensus Hold rating among 30 Wall Street analysts. That rating is based on one Buy, 26 Hold, and three Sell recommendations issued in the last three months. The average INTC price target of $22.24 implies 6.79% downside risk from current levels.
