Trump Administration’s Stake in Intel: Strategic Move or a Slippery Slope to Socialism?
A look at the U.S. taking 10% equity stake in Intel and why it should be regarded as a strategic investment rather than a foray into socialism.
Late last week, it was announced that the Trump administration had reached an agreement for the federal government to acquire a roughly 10% stake in Intel, one of America’s leading chipmakers.
The deal involves the government investing $8.9 billion in Intel common stock, funded via grants under the CHIPS and Science Act (enacted in 2022 to address semiconductor chip shortages) and through other related federal programs.
The deal puts Trump on better terms with Intel CEO Lip-Bu Tan, after the president recently said the CEO should step down due to conflicts of interest. It will ensure that the chipmaker will receive about $10 billion in funds for building or expanding factories in the U.S.
Under the agreement, the U.S. will purchase a 9.9% stake in Intel for $8.9 billion, or $20.47 per share, which represents a discount of about $4 from Intel’s closing share price of $24.80 on Friday.
The purchase of the 433.3 million Intel shares will be made with funding from the $5.7 billion in unpaid grants from the Biden-era CHIPS Act and $3.2 billion awarded to Intel for the Secure Enclave program, also awarded under Trump’s predecessor, Democratic President Joe Biden.
Intel stock rose roughly 1% in the extended session on Friday after closing up 5.5% during regular trading.
This is the latest special deal the Trump administration has made with American companies, under the “public-private” partnership template that the President favors (especially regarding the space industry). In April, the administration reached an agreement allowing AI chip giant Nvidia to sell its H20 chips to China in exchange for receiving 15% of those sales. The Pentagon recently became the largest shareholder in a small mining company, MP Materials, to boost the output of rare earth magnets essential for our defense industry.
I would argue that there are strong arguments in favor of the government’s move to back Intel through the procurement of common stock. To begin with, semiconductors are the backbone of modern technology and are vital for defense, infrastructure, and communications. By directly investing in Intel, the administration clearly plans to enhance and maintain a secure domestic chip supply and avoid strategic vulnerabilities related to foreign production.
Commerce Secretary Howard Lutnick clearly stressed that part of the rationale for taking a stake in the company is to reshore chip production.
“We cannot rely on Taiwan, which is 9,500 miles away from us and only 80 miles from China,” he told CNBC’s “Squawk Box.” “So, you can’t have 99 percent of leading-edge chips made in Taiwan. We want to make them here.”
“One of those pieces is it would be lovely to have Intel be capable of making a U.S. node or a U.S. transistor, driving that in America,” he added.
This type of deal is not the first of its kind, either. During the 2009 auto industry bailout, the government injected nearly $50 billion into General Motors in return for a roughly 60% stake in the automaker.
However, it must be noted that the government will not take a seat on Intel’s board or exercise governance rights. The agreement intends to provide a financial backstop rather than ongoing operational control. As a bonus, instead of just doling out money in the form of a grant, American taxpayers should see a return on investment if the company prospers.
It’s called “Return on Investment,” and it is a good thing.
Lots of criticism of the 10% stake in Intel. $INTC
But wait a second. All the Trump administration did was convert $9 billion in gifts, grants, and program funds into equity.
The equity stake is being funded through a conversion of existing federal support:
•$5.7 billion in… pic.twitter.com/csEybgjAng— Allen Puwalski (@puwalski) August 23, 2025
On the other hand, many reasonable people are concerned that moves like this veer dangerously close to the kind of economic intervention associated with socialism. And many are justifiably concerned about a government being able to pick winners and losers.
However, the fact of the matter is, American manufacturing has been gutted and hindered by awful policy choices. These destructive programs weren’t only from Obama or Biden, but Team Bush did Americans no great favors either.
And a great deal of discretion needs to be given to industries that our vital to our national defense.
First, it’s a complicated policy issue that is probably better in the hands of a more policy nuanced administration.
But somehow many decades of blind policy resulted in high 90s% of our chips being made in a territory that has an uncomfortable probability of coming under…
— Allen Puwalski (@puwalski) August 23, 2025
I would argue that the Trump administration’s stake in Intel is justified given the serious issues with the semiconductor supply chain and the need to preserve American technology leadership. However, this type of approach must be watched with great vigilance. It is good to see the absence of governance rights and a clearly delineated scope for intervention clearly spelled out in this deal, as a healthy and adaptive economy needs to avoid sliding down into a socialist slope.
The Intel strategy safeguards national interests in a critical sector without fully crossing into the pitfalls of socialism. But policymakers must remain vigilant and ensure these interventions remain exceptional, transparent, and subject to regular scrutiny.
Finally, I am inclined to trust the Trump team on this matter, given all the other policy successes I have observed so far in the President’s second term.
Today in “Would you idiots please stop trying to make me into a Trump supporter?”
The federal government just paid $8.9B to take a 10% stake in Intel . Various people are posturing about “socialism” and Trump “seizing the means of production”.
There’s a lot for me to disagree…
— Eric S. Raymond (@esrtweet) August 23, 2025
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Comments
Socialism
Too big to fail
Not a god idea
After watching money via grants fly out of the Biden Administration to who knows where Trump is at least trying to do two things. He is attempting to encourage companies to onshore chip production as a national defense strategy and also acquiring a non voting stake for the government to keep an eye on the company. I’m not a fan of government interfering with the private sector via stakes in companies but we are long past the point of no return on this.
Overall the interventions can sound alarming but can be understood under Nat Defense concerns. Propping up GM was seen as a necessity for economic reasons I guess. Today chips have taken the place of crude oil as a Nat Sec commodity. I will stay mum on Nvidia since I own shares already. But what I have yet to understand is just what happened to Intel over the years as they seem dead in the water?
The administrative class flew engineering into the ground. The same as Boeing. The same thing is about to happen / has happened to medical care.
Propping up GM included screwing bondholders who had first priority claim on assets of the company, compared to unions who were just general creditors. That was an outright taking from bondholders. Priority is the essence of the credit markets, and loans are priced to accommodate it.
“Finally, I am inclined to trust the Trump team on this matter, given all the other policy successes I have observed so far in the President’s second term.”
Me, too. But one day a pharoah who knows not Joseph will rise up, and that never ends well.
Moreover, I’m curious how many congress critters purchased Intel stock last week before this deal was announced. I guess we’ll find out in 45 days when they are required to declare their buy/sell deals.
I’m certain any purchases will all be just a coincidence…
Insider trading is actually a positive for all concerned. The stock is mispriced and the inside traders move it to the correct price. So the unfortunate seller gets more for his stock that he would have otherwise because insiders are buying it.
That said, more money has been lost in inside information than any other cause.
Intel had lost their way years ago. They stayed with the x86 architecture, which was power hungry and slow, even when smart phones were being first designed clearly requiring low power computing. Similar needs of power efficiency is required for embedded computing – think the internet of everything including cars so Intel is losing out in the smart phone and embedded market. .With the greater numbers of smart phone and declining sales for PCs, ARM and its licensors simply ate Intel’s lunch. Then when NVIDIA successfully pivoted their graphics driver chips to implement AI, Intel was again on the outs. TSMC with their open foundry model has leveraged the market for multiple system on a chip (SoC) designs to feed their factories and drive technological innovation again leaving Intel in the technological dust. As long as we have WinTel PCs, Intel has a business. Beyond that, it is debatable given the Intel track record in the past several decades of strategic planning. This deal is framed as the government getting equity for money already allocated to Intel. If that is indeed the case, this may well be making the best of a bad decision. But I’m afraid that in the future we will witness some Democratic-Socialist proposing nationalizing some industry and pointing to DJT’s Intel equity arrangement for justification.
New laptops don’t heat the house in the winter like an army of the 2005=2015 versions, say you’re working a massive parallel math problem once a year.
Don’t like this trend.
Government picking winners.
Socialism.
Spending money we dont have
Crony capitalism
No seat on the board
Insider trading (likely)
AMD took heaps of money from the German government to stay afloat.
In the early 2000s, this and shorting their own stock (I’m serious) was the only cash they had in some quarters. They were literally selling covered calls and buying puts on their own stock going down!!! It was on their 10k/10q!!!!
I’ve got a 20 year window of Intel. 10 on the inside and another 10 adjacent.
In the 90s they would take risks on innovation. The Intel Architecture Labs were inventing some really cool stuff. However Intel would never invest in it. They would never invest in anything outside of manufacturing. They would give away millions, to SW companies but never enter the pool themselves in spite of having some really decent tech.
So in 95-97, MSFT had some desktop products and an OS. Intel could have gotten into the console market, but chose not to. Boom- then XBOX became a thing.
Few people know this but Intel actually made PCs and servers. They were every bit as good as what OEMs were selling, but they would never enter the market for fear of pissing off the OEMs (CHICKEN SHIT MOVE BY
MANAGEMENT- like every other move).
Their first graphics card (i740) was so-s0, not a killer, but not bad. However they refused to invest. At this time 3DFX was buying up all the tech and hiring all the engineers … (my team lost one of the smartest guys I’ve ever met to them)- and I believe this was later bought up by NVDA. Intel backed out of the graphics gig and only later re-entered in the budget market. Total chicken shit move.
By 2000, Intel was steeped in NOT innovating and they were playing the game of keeping wall street happy by just being earnings estimates…. ALWAYS by cost cutting. Not only did this make Intel a worse company, it fast became a really shitty place to work.
I was gone in 2006, but by 2017, they had gotten so damn cheap, they would literally track to the person how many freaking photo copies they made and nit pick them over the necessity.
While hunting for my current gig- I did two informational interviews with them. One was with the supply chain team- and they were doing serious stuff that mattered and I could tell this team was serious. The other team was the team I mentioned earlier that put out the PCs, / Servers. These are the development systems they send out ahead of launch (and are just as good as OEM stuff)- however that team was being run by a blue haired woman who had been promoted her entire career for being female. She got really annoyed with me in the informational and was sort of c**t in saying the interview wouldn’t go any further. Never mind I knew the product and the team and the people started that team better than she did.
That brings me to my last point. Back in the 90s, a lot of women were hired there for their looks. Being flush with cash, a lot of managers hired eye candy. More than a little dating subordinates was happening and I’m surprised they didn’t get burned by this. Later as “women in IT” got to be a big thing, these ladies and some of the other worthless females at the company advanced when they ought not to have. Well this results in contributing to the Intel you have today.
It’s too bad, because I knew some of the architects and firmware guys and they were freaking smart.
Intel was a chief customer for chip logic verification software (safety and liveness) in the 2000’s, so there had to be a lot of new designs.
Microsoft re-became the juggernaut it is today by re-inventing itself away from boxed SW. They became cloud SW providers. They bet the farm on it. They soon after became the OWNER of the cloud, as did AMZN. Hence you see both companies along with Apple, Google and a few others soar during these years.
Not Intel. Just making chips. They could have freaking owned the entire cloud. They could have gotten big into the NW hardware and taken on Cisco. Nope.
They refused to innovate. They refused to re-invent themselves.
They wanted to be nothing more than a commodity supplier racing to win in a market of declining margins.
My 1998 employee stock options (at 75) which expired in 2012 but if they hadn’t it wouldn’t matter because they have been garbage since 2000. That’s piss poor company leadership.
The funny thing is- when I was an intern, Apple was about to go belly up and the stock was like 13 bucks/share going into the dot com bubble. We joked about how worthless they were as an investment compared to Intel. A year or so later, they come out with the ipod and they haven’t looked back.
If we were sitting in the early ’90s before our governing and financial class (with the enthusiastic support of many of the ‘conservative’ talking heads pearl clutching today) sold out domestic US manufacturing/industry to globalism (aka cheap foreign labor offshore production without the same pesky environmental/legal and labor condition constraints as they simultaneously burdened the domestic US market with) then we’d have a far different conversation.
There wouldn’t be a need to take such innovative steps to fix our domestic capacity b/c we’d have kept the capacity here along with good paying/good benefit jobs that used to comprise the middle-class. For that matter we might have avoided the clamor for Obama Care b/c those deliberately gutted manufacturing/industrial jobs came with good health benefits.
We gotta get back enough independence to manufacture all sorts of necessary things or put our economy at the mercy of other Nations. As highlighted during ‘Rona Mania the supply chain is fragile. We don’t make Aspirin in the USA anymore much less a host of other very necessary items for a modern 1st world Nation. This sucks that we gotta have the Federal Gov’t take ownership stakes in domestic US corporations to get the necessary capital to undo or at least mitigate the failed policies of globalism.
It would be nice if all the pearl clutching ‘conservative’ voices had been willing to do what was necessary over the past several decades to ‘conserve’ our domestic manufacturing and industrial base along with the good paying/good benefit jobs. Had they been willing to do so instead of selling out the middle-class to globalism so their stock prices went up a few extra % based on slave labor conditions in overseas production…. we wouldn’t need to take this step.
didn’t work for Hugo Chavez and won’t work now
Hugo Chavez daughter is a 4billionaire
FWIW I didn’t claim it would or wouldn’t be successful. In fact lamented that it was made necessary to find new solutions by the malfeasance of the globalists/neocons and general indifference of the credentialed/leadership class to the entirely predictable decisions to eviscerate the American middle-class by off shoring the good paying/good benefit manufacturing/industrial production jobs.
If you have a feasible alternative then lets hear it.
My concern is that the government mismanages everything it touches. And intel has already been mismanaged. This is a recipe for billions of lost dollars.
Bad bad bad for several reasons
Now the feds have an incentive to show favoritism over competitors
If it loses money, it gets subsidies from the taxpayers, no incentive to make a profit?
Plus government should not own companies and should not fund NGO’s either
1) Show me the constitutional authority.
2) “But all we’re doing is replacing one unconstitutional money firehose with another!” Yup, that makes it all OK.
3) Trump sets precedent with this, Democrats will be buying stock in Sancho Panza Wind Farms. You thought Solyndra was a scandal?
3) Socialism? We’re tickling the f-word here. Either that or the reverse f-word, which means industry capture of government agencies.
In fairness in modern era Reagan set the precedent with Auto industry. ‘W’ Bush followed up with bank/financial bailout. His father as well with S&L crisis and establishing the Resolution Trust. Whether we call it a bailout or investment to assist domestic corporations the mechanics of US Taxpayer dollars going out the door to private corporations doesn’t change.
It would be far better to have a situation where this sort of govt injection of capital wasn’t necessary to get not just critical items but all sorts of things manufactured domestically so we didn’t have strategic vulnerabilities to supply interruptions we currently have.
I don’t like this either but I am not seeing any short term alternatives.
As at least one commenter has already pointed out, there is a legacy of decision making–both within Intel and within the government–that made high-end chip-making a foreign activity. That is unfortunate, and the increasing level of risk that Taiwan will be seized by the Chinese Communist Party (while we observe the niceties that there is a country called China, that country ceased to exist in 1949; what really exists is a political party that has an army and occupies a large piece of land in Asia) is a threat to our ability to operate a modern economy. The only viable path to remedy this problem involves federal expenditures; the question is what “strings” are attached to those funds.
Having said that, the skeptics have a good point: the federal government is not a trustworthy entity, and the Democrats will have their opportunity soon enough to follow this path for their favored industry/industries. The only way to fix the problem is for the American people to watch the government closely and make their concerns known during election season (for the House, at least, it’s always election season since they face the voters every other year).
We forget at our peril that government of the people, by the people, for the people only works well if the people are heavily involved and aware of what their representatives think and do.
Intel is going down as a chip designer, but it might be salvageable as a manufacturer.