Nvidia And Intel Lead Tech Stock Drop As White House Reportedly Seeks Equity For CHIPS Grants

Core Viewpoint - The U.S. government is considering acquiring equity stakes in semiconductor companies, including Intel, in exchange for grants under the CHIPS Act, which has led to a decline in tech stocks, particularly Nvidia, Intel, and Palantir [1][2][4]. Group 1: Government's Equity Stake Plan - Commerce Secretary Howard Lutnick is exploring a plan for the U.S. to gain equity stakes in chipmakers in return for grants provided under the CHIPS Act [1]. - The U.S. is reportedly looking at acquiring a 10% equity stake in Intel, valued at approximately $10.4 billion, which could position the U.S. as the largest shareholder of the company [2]. - There are indications that the U.S. may extend its equity requests to other companies receiving CHIPS Act funds, such as Micron, TSMC, and Samsung [3]. Group 2: Market Reactions - The Nasdaq index fell nearly 290 points (1.3%) during intraday trading, with significant declines in shares of major tech companies: Nvidia (2%), Intel (7%), Palantir (5%), AMD (2%), and Broadcom [4]. - Other notable declines included Micron (5%), Tesla (3%), Amazon (2.1%), Apple (1.6%), and Microsoft (0.8%), while TSMC's shares dropped over 2% in Asia [4]. Group 3: Historical Context of U.S. Equity Acquisitions - Historically, the U.S. government has not frequently acquired equity in companies, but has done so during financial crises, such as with banks and automakers during the 2008 financial crisis [5]. - Previous instances of U.S. equity acquisition include Chrysler in the late 1970s and defense-related industries during World War II [5]. Group 4: Political Commentary - Former President Donald Trump has criticized the Biden-era CHIPS Act, labeling it as ineffective and suggesting that the government should seek equity in exchange for funding [6]. - Lutnick highlighted the shift in approach, stating that the Biden administration was providing funds without seeking equity, contrasting it with Trump's proposal for a stake in return for financial support [6]. Group 5: Related Developments - SoftBank announced a deal to purchase $2 billion worth of Intel stock at $23 per share, indicating ongoing investment interest in the semiconductor sector [7].