This story is baffling me.
The U.S. government is investing $8.9 billion in Intel, primarily funded by grants that were already allocated to the company under the Biden administration’s CHIPS Act. This investment includes $5.7 billion in remaining grants and $3.2 billion from the Secure Enclave program. President Donald Trump announced that Intel CEO Lip-Bu Tan agreed to give the government a 10 percent stake in exchange for this financial support, framing the deal as essential for Tan’s continued leadership at the company. This move comes amid Intel’s ongoing struggles and follows SoftBank’s recent announcement of a $2 billion investment to bolster chip production in the U.S. According to Intel, the government’s stake will be passive, with no representation on its board or governance rights. Treasury Secretary Scott Bessent suggested that the investment aims to stabilize Intel’s operations and enhance domestic chip production.
Critics, including some Republicans and Libertarians, argue that these moves contradict traditional free-market principles. For instance, Senator Thom Tillis expressed confusion over how this aligns with true conservatism. Meanwhile, Intel CEO Lip-Bu Tan stated that the government’s involvement would be passive, aiming to enhance the U.S. semiconductor industry without interfering in business decisions.
Bernie Sanders, the Independent Senator from Vermont, has expressed support for the plan. Sanders stated that if microchip companies profit from federal grants, taxpayers deserve a return on their investment.
The Washington Post weighs in, arguing that the deal is misguided, as it allocates $9 billion in taxpayer money for a 10 percent share of a company that has struggled to maintain competitiveness. Intel’s stock price has plummeted from over $50 per share in July 2021 to just $24.80 as of August this year, highlighting its ongoing decline. The article contends that subsidizing failing companies does not solve deep-rooted issues and suggests that a better strategy would involve enhancing supply chains and improving domestic manufacturing conditions instead of emulating state-managed economic practices seen in other countries like China.
Why do we care?
So the U.S. government just bought ten percent of Intel. Nine billion bucks of taxpayer money, tied up in a company whose stock has been sliding for years. All in the name of “national security.” Here’s the thing—this isn’t capitalism, it’s industrial policy, and it looks a lot more like China than the U.S. we’re used to. The President picking specific companies as winners and losers is new.
If Washington is picking winners, that changes how chips hit the market. Prices, supply, and even vendor roadmaps won’t be purely competitive anymore—they’ll be political. For IT services providers, you need to prepare your customers: Intel may feel safer in the short run, but that doesn’t solve its execution problems. Don’t bet the farm on one vendor. Spread your hardware bets—AMD, ARM, and others—because government “stability” doesn’t equal market success.