Commerce Secretary Howard Lutnick told CNBC the U.S. government wants a stake in Intel in exchange for CHIPS Act grant money promised under Biden.

Shares of Intel (NASDAQ: INTC) are falling on Wednesday, down 7% as of 12:14 p.m. ET. The drop comes as the S&P 500 and Nasdaq Composite fell 0.4% and 1%, respectively. The struggling chipmaker's stock is sliding as investors await the U.S. government's decision over whether to take an equity stake in the company.

At the same time, the U.S. government has signaled interest in taking a direct stake. Treasury Secretary Scott Bessent described domestic semiconductor production as vital to national security, while Commerce Secretary Howard Lutnick suggested that Intel should provide equity in return for CHIPS Act support.

The investment case for Intel has fundamentally changed. The stock should no longer be valued solely on its near-term earnings or competitive battles. It must now be viewed as a long-term, strategic asset with a quasi-sovereign backstop, trading near its tangible book value per share of approximately $24.26.

But Intel wasn't alone in winning CHIPS Act grants. As CNBC points out, Taiwan Semiconductor (TSMC) was awarded $6.6 billion in U.S. government semiconductor subsidies. And now it seems U.S. Commerce Secretary Howard Lutnick may want to convert that grant into an equity stake as well.

The industry looks very different from when Intel was the clear leader. Nvidia and AMD dominate AI and data centers, while TSMC is the dominant foundry. Intel is now cast as the underdog.

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In a just-breaking development, Bloomberg reports the Trump administration may take a 10% stake in Intel ( INTC -3.71%) -- which perversely is down 3.9% on the news, at least as of 12:35 p.m. ET. Probably not the reaction that either the Trump administration or Intel itself anticipated.

Intel Corp (NASDAQ:INTC) shares are trading higher Tuesday after it was announced that Softbank will invest $2 billion in the company.

President Donald Trump wants the U.S. government to own a piece of Intel, less than two weeks after demanding the Silicon Valley pioneer dump the CEO that was hired to turn around the slumping chipmaker.

Despite the rocky relationship between President Donald Trump and CEO Lip-Bu Tan, the government is reportedly eyeing a stake in Intel.