The federal government is in talks to take a roughly 10% ownership stake in embattled American semiconductor giant Intel, according to White House officials cited by Bloomberg News.
One way a federal investment could occur is by transforming the $10.9 billion in grants provided to the troubled chipmaker through the CHIPS and Science Act into an equity stake in the company. Signed into law in 2022 by President Joe Biden, the $280 billion CHIPs Act aimed to boost semiconductor manufacturing and technology development in the United States.
If the investment goes through, it will not be the first for the Trump administration. Nippon Steel gave President Trump a “golden share” as part of an agreement allowing the Japanese firm to take over U.S. Steel, providing him with sweeping veto powers over decisions made by the American company. And the Department of Defense announced last month that it would take a $400 million ownership stake in MP Materials Corp., a producer of rare earth materials.
Analysts expect to see more state investments in firms operating in strategically important industries, especially those competing with powerful Chinese manufacturers.
Critics, though, have expressed concerns about the nature of these investments and questioned Trump’s seemingly ad hoc forays into industrial policy and corporate governance.
“[T]he government’s interest in Intel as a national-security matter is real. But taking a stake in the company could have vast unintended consequences, especially given Trump’s recent propensity for trying to exert direct influence over private business decisions,” write Dan Gallagher and Asa Fitch at The Wall Street Journal.
Others have noted the irony in Trump’s decidedly statist approach and his frequent attacks calling Democrats “radical” socialists or communists.
“The Democrat would have been accused of being a communist and a lot of other Republicans probably would not have felt comfortable moving in this particular direction because of their greater commitment to market principles,” Sarah Bauerle Danzman of the Atlantic Council told CNBC after the U.S. Steel takeover was announced. Danzman added that government investments can distort markets, laying the foundation for “a cascade of new market failures” in the future.