Better to be diluted than continue to invest in a company that goes to zero.

And it's the standard refrain: if this money helps Intel get back on its feet, the stock price will go up, presumably to the point dilution won't matter.

But who cares, really? If it's true that Intel is actually strategically important to the US, the shareholders are irrelevant if need be. It's not a great outcome, sure, but Intel has been mismanaged for a long time, and investors should have known the risks of investing in a company like that.