How a Trump-Era Deal Blocked Intel from Selling Its Foundry—And Reshaped U.S. Tech Policy
The semiconductor industry is the central battlefield of 21st-century geopolitics. It’s where national security, economic dominance, and technological innovation collide. In a pivotal but underreported move, the Trump administration reportedly structured a deal to prevent Intel from selling its struggling foundry unit.
This decision wasn’t just a corporate intervention; it was a strategic gambit with profound implications for the U.S.-China tech war and the future of American chip manufacturing.
Let’s break down the background of Intel’s challenges, the government’s national security concerns, and how this deal continues to shape the semiconductor landscape today.
Background: Intel’s Foundry Dreams and Struggles
For decades, Intel reigned supreme in the semiconductor world, dominating the PC era with its advanced manufacturing. However, the past decade saw the company lose its process technology lead to Asian powerhouses like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung, which raced ahead on advanced nodes (5nm, 3nm, and beyond).
In response, Intel pursued a bold strategy: become a Integrated Device Manufacturer (IDM) 2.0. This meant not only designing its own chips but also building a foundry business—manufacturing semiconductors for other companies. The goal was clear: compete directly with TSMC and reclaim technological leadership.
But the plan faced significant headwinds:
- Technical Delays: Repeated setbacks in rolling out its next-generation process nodes.
- Fierce Competition: An uphill battle against foundries with established customer trust and cutting-edge capabilities.
- Colossal Costs: Building state-of-the-art fabrication plants (fabs) requires investments of tens of billions of dollars.
Amid these challenges, speculation grew that Intel might spin off or sell its capital-intensive foundry unit to streamline operations and focus on chip design.
The Trump Administration’s National Security Imperative
The White House viewed a potential sale through a different lens: national security. Semiconductors are the lifeblood of modern military systems, critical infrastructure, and the broader economy. The administration feared a foreign acquisition of Intel’s foundry capabilities would be a catastrophic strategic error.
Their core concerns were:
- Safeguarding Critical Technology: A foundry sale could transfer sensitive semiconductor intellectual property and manufacturing know-how abroad, potentially to adversarial nations, weakening the U.S. defense industrial base.
- Reducing Foreign Dependency: The U.S. already relies heavily on TSMC (in Taiwan) and Samsung (in South Korea) for its most advanced chips. Losing domestic capacity would deepen this vulnerability, exposing supply chains to geopolitical disruption.
- Countering China’s Rise: This move aligned with the administration’s broader strategy to stifle China’s “Made in China 2025” ambitions, particularly in semiconductors. Allowing a key asset like an Intel foundry to fall into Chinese hands was unthinkable.
How the Deal Was Structured to Block a Sale
While not a single public document, the administration’s strategy was implemented through a multi-pronged approach:
- Leveraging CFIUS: The Committee on Foreign Investment in the United States (CFIUS) was empowered to scrutinize and effectively block any foreign investment in the foundry unit on national security grounds, creating a powerful deterrent.
- Offering Government Support: Instead of a sale, the administration pushed for domestic reinvestment. This included early discussions that paved the way for the landmark CHIPS and Science Act, which would later provide billions in subsidies to bolster U.S. chipmaking.
- Implicit Veto Power: The message was made clear to Intel: any attempt to sell the unit to a non-U.S. entity would be met with swift regulatory rejection.
The structure of this “deal” ensured that Intel’s manufacturing future would remain inextricably tied to U.S. interests.
Implications for Intel: A Double-Edged Sword
For Intel, this government-backed direction was a mixed blessing:
- The Upside:
- Guaranteed Support: It secured promised government funding, policy backing, and a status as a “national champion.”
- Strategic Positioning: It cemented Intel’s role as a cornerstone of U.S. technological independence.
- Long-Term Confidence: It provided a clear, if challenging, mandate to rebuild its manufacturing moat.
- The Downside:
- Lost Flexibility: It eliminated the option to jettison a financially draining division to improve its balance sheet.
- Immense Pressure: It forced the company to succeed in the brutally competitive foundry market against established giants.
- A Costly Gamble: It committed the company to a high-risk, capital-intensive turnaround plan with no guarantee of success.
The bottom line: Intel had to double down on its foundry ambitions, for better or worse.
Broader Impact on the Semiconductor Industry
This decision was a key early salvo in the ongoing tech cold war and had ripple effects across the global industry:
1. Accelerating U.S. Semiconductor Independence
The move preserved a vital domestic asset for advanced manufacturing, setting the stage for Intel’s massive new fab investments in Arizona, Ohio, and elsewhere, and catalyzing the push for the CHIPS Act.
2. Intensifying Global Competition
By keeping Intel in the foundry game, the U.S. ensured a third major player could compete with the TSMC-Samsung duopoly, potentially leading to more innovation and supply chain diversification.
3. Highlighting Supply Chain Fragility
The COVID-19 pandemic that followed underscored the wisdom of this decision, highlighting the dire economic and national security risks of over-concentrated chip production overseas.
4. Defining the Geopolitical Battlefield
It firmly placed semiconductor manufacturing at the center of U.S. policy tools, alongside other actions like Huawei bans and export controls on advanced chipmaking equipment.
The Path Forward: Intel Foundry Today
The legacy of this decision is still unfolding. Under CEO Pat Gelsinger, Intel fully committed to the IDM 2.0 strategy, launching Intel Foundry as a separate business unit. It has announced massive investments, won key customers, and secured significant U.S. government funding under the CHIPS Act.
The Trump-era intervention, while restrictive, forced Intel onto a path that aligns with long-term U.S. strategic goals. The gamble is still in play, but the stakes are higher than ever
More Than a Business Decision—A Strategic Move
The move to block the sale of Intel’s foundry unit was a definitive moment. It signaled that the U.S. government would no longer treat critical technologies as mere market commodities. This was a policy driven by the urgent need to counter China, secure supply chains, and reclaim technological sovereignty.
While it burdened Intel with a monumental challenge, it also provided the company with a renewed purpose and government partnership. The success of this gamble is still being written in silicon, but its message is clear: in the modern era, chipmaking is inseparable from statecraft.
