Why Is Intel Stock Down on Monday?

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. Image source: Getty Images. $10 billion, or 10%? We heard rumors last week that a direct investment in Intel might be in the offing, and today's news seems to confirm this -- or at least confirm that talks are occurring. As Bloomberg reports, the plan is for the government to take money already awarded to Intel under the CHIPS Act and convert it into a government ownership stake in Intel. Intel has so far been awarded $10.9 billion under that act. At the company's current $103.3 billion market capitalization, that would work out to about 10% of the company's market cap. And that right there, I suspect, is why Intel stock is dropping today, not popping. If Intel had been awarded $10 billion-plus in grants already, and the plan was to invest $10 billion-plus more into Intel for an ownership stake, well, that's one thing -- and probably a good thing in the minds of investors. If the government plans instead to demand shares for the grants it's already awarded, and maybe not make any additional investment at all, well, that's bad news for Intel. Buy or sell semiconductor stocks? It wouldn't be great news for investors in other semiconductor stocks, either. However it comes about, giving the government a stake in Intel's success would also give the government an interest in ensuring Intel succeeds -- perhaps at the expense of rivals like Nvidia and AMD. Bad news for Intel today, it turns out, could be bad news for a whole lot of investors.