Trump’s Intel Bet: Will His Chip Gamble Pay Off?
▼ Summary
– The US government plans to take an equity stake in Intel in exchange for grants under the CHIPS Act to boost domestic chip manufacturing.
– This move aims to help Intel fund its US-based semiconductor fabrication plants and reduce reliance on overseas chipmakers for national security.
– Critics argue that government ownership could create conflicts of interest and may not effectively achieve the goal of strengthening domestic chip production.
– The government has a history of intervening in the private sector, such as with bailouts during the 2008 crisis and investments in energy and rare-earth magnet companies.
– The Trump administration has expanded public-private partnerships, including a recent steel deal where the government secured influence over company decisions.
The US government is exploring a significant equity investment in Intel Corporation, leveraging funds already allocated under the CHIPS Act to strengthen domestic semiconductor production. This strategic move aims to reduce reliance on foreign chipmakers and bolster national security, though it raises questions about the long-term implications of state involvement in private industry.
Commerce Secretary Howard Lutnick recently confirmed that federal officials are negotiating for an ownership stake in Intel in exchange for previously committed grants. While specific terms remain under discussion, earlier reports suggested the government might seek up to 10 percent equity in the chipmaking giant. This arrangement would provide Intel with crucial capital to expand its US-based fabrication plants, known as fabs, which require enormous ongoing investment even as the company faces shifting market demand.
Proponents argue that supporting Intel is vital for maintaining a competitive edge in global technology and securing supply chains against geopolitical risks. Critics, however, warn that direct government ownership could introduce conflicts of interest and inefficiencies. Stephen Moore, a former economic advisor to Donald Trump, cautioned that such interventions resemble European industrial models that have historically struggled. He emphasized that any state involvement should be temporary, with a clear plan for eventual divestment.
This is not the first time the US has intervened in private markets. Historical examples include the Synthetic Fuels Corporation in the 1980s, a multi-billion dollar initiative that ultimately collapsed, and the bailouts of automakers and financial institutions during the 2008 crisis. More recently, the Department of Defense provided funding to MP Materials to scale production of rare-earth magnets and reduce dependence on China.
The current administration has shown a willingness to deepen public-private ties, as seen in the conditional approval of Nippon Steel’s acquisition of US Steel. That deal included a national security agreement and a “golden share” provision, granting the government influence over corporate decisions. A similar approach with Intel could signal a new era of industrial policy, where federal oversight plays a direct role in shaping strategic sectors.
Whether this gamble will pay off remains uncertain. While the immediate cash infusion may help Intel modernize its operations, the broader success of such partnerships will depend on balancing innovation with accountability, ensuring that public funds yield tangible benefits without stifling private enterprise.
(Source: Wired)
