Donald Trump just did something even bolder. He won a prized 10% shareholding in Intel, the US’s largest semiconductor fabrication plant. Read to learn why, in many respects, this acquisition represents a watershed moment for the federal government’s engagement with private enterprise. The U.S. federal government turned unpaid research and construction grants from the 2023 Chips Act into ownership stakes in a Fortune 500 company. With this decision, Trump seeks to protect an industry that even his own administration recognizes as vital to national security. Yet this change raises deeply troubling questions about the role of government ownership in the private sector.
In his announcement, Trump pitches the move as positive for national security. This announcement comes at a time of increasing global competition in the semiconductor sector. Trump’s OMB would like you to believe that the U.S. paid “zero” for the approximately $9 billion in non-voting shares. That said, this claim has opened the door for debate on if such interventions are welcome in a normally free-market focused economy.
Moreover, as critics have noted, such a transaction is fundamentally at odds with both American tradition and small-government conservative values. Such government stakes in private companies are historically, though not without exception, anomalies. During the 2009 financial crisis, the U.S. government acquired partial ownership of major corporations such as General Motors, Citigroup, and AIG. On a more substantive note, what Trump is doing now has opened up the argument over the proper role of government in business.
“Does anybody think they’re going to sit idly by while the government has a 10% stake in Intel and not have something to say there about Intel’s policies on green tech, on diversity, on corporate responsibility?” – Tad DeHaven, economic policy analyst with the Cato Institute
Trump has been making a string of daring moves. To this end, he has raised tariffs and sent the National Guard to U.S. cities. Still, altogether, these actions show a penchant for the direct intervention in markets he feels are central to American competitive advantages that, at least historically, have prevailed. His advisors think this Intel deal could be a critical piece to contribute to a bigger plan. They believe it would be a step towards establishing a U.S. sovereign wealth fund.
Howard Lutnick, Secretary of Commerce, expressed a similar desire to have taxpayer equity stakes in defense and munitions contractors. He noted that companies like Lockheed Martin generate 97 percent of their revenue from the federal government, highlighting the interconnectedness of government and industry.
“If we are adding fundamental value to your business, I think it’s fair for Donald Trump to think about the American people.” – Howard Lutnick
Inside / Outside Critics argue that this deal would pose much deeper threats by expanding corporate political influence over decision-making processes.
“This is injecting the government directly into the lifeblood of a major corporation’s decision making.” – Tad DeHaven
Some see this as a smart move by Trump to use his business savvy for the good of the country. He’s made much of his deal-making prowess and financial acumen on the campaign trail and into his presidency.
“I will make deals like that for our country all day long,” – Donald Trump
Trump’s chief economist, Kevin Hassett, telegraphed the administration’s intentions to have the federal government venture into new sectors. He posited that transactions like the Intel deal are likely to be the new normal across many industries.
“I’m sure that at some point there will be more transactions, if not in this industry in other industries.” – Kevin Hassett
Others think that what Trump has done can help fire up Intel so that it becomes much more competitive. Critics fear that this new emphasis may shift away from economic imperatives and towards political imperatives.
“You’re looking at investment decisions now having to be made on the basis of politics, not economics.” – Tad DeHaven
As Trump strikes out in these uncharted waters, he receives praise and condemnation from both sides of the political aisle. Significantly, even socialist firebrand Senator Bernie Sanders applauded Trump’s decision. It was a perfectly reasonable idea to have Americans own a stake in the companies that are being propped up by government assistance, he argued.