(Reuters) -The Trump administration is said to discuss taking a 10% stake in American chipmaker Intel, Bloomberg News reported on Monday, citing a White House official and other people familiar with the matter.

Shares of the company were down 3.8%.

The federal government is considering a potential investment in Intel that would involve converting some or all of the company's grants from the U.S. Chips and Science Act into equity, the report said.

Trump, who met Intel CEO Lip-Bu Tan on August 11, has taken an unprecedented approach to national security.

He has pushed for multibillion-dollar government tie-ups in semiconductors and rare earths such as a pay-for-play deal with Nvidia and an arrangement with rare earth producer MP Materials to secure critical minerals.

Tan, who took the top job just over six months back, has been tasked to turnaround Intel.

Federal backing could give Intel more breathing room to revive its loss-making foundry business, analysts said, but it still suffers from a weak product roadmap and challenges in attracting customers to its new factories.

(Reporting by Zaheer Kachwala and Jaspreet Singh in Bengaluru; Editing by Arun Koyyur)