What Happened

In a historic intervention, the U.S. government under President Donald Trump has taken a 9.9% equity stake in Intel, a technology company that builds and sells computer components such as central processing units and related products. This move marks a significant departure from American free-market principles, and some even argue that it is a destabilizing shift toward state-managed capitalism akin to that of China. 

The investment totals $8.9 billion: $5.7 billion from previously allocated but unpaid CHIPS Act Grants and $3.2 billion from the Secure Enclave program. Additionally, the government received a five year option to purchase an extra 5% of Intel shares at $20 per share, which can only be exercised if Intel’s foundry business falls below 51% ownership.

Intel CFO David Zinsner announced that the funds were delivered on Wednesday, cementing the deal. The U.S. is now one of the largest shareholders, although the government holds no direct board representation. Rather, it agreed to vote alongside Intel’s board except in narrowly defined scenarios.   

Intel’s share price has shown mixed reactions. It climbed 5-6% during regular trading, but dipped 0.8% by Thursday’s close to around $24.64. This financial move is meant to prop up Intel’s foundry arm amid escalating competition and financial difficulties. 

Strategically for President Trump, this decision is meant to boost U.S. technological sovereignty. With Intel lagging behind the global leaders of the semiconductor industry such as Taiwan’s TSMC, the administration has framed the move as a taxpayer-neutral transaction that boosts domestic chip manufacturing, especially amid tensions surrounding China and Taiwan. The administration ultimately seeks to ensure that Intel maintains its competitiveness in the global market. 

Responses to Decision

This announcement has incited a wide range of opinions and discourse. In an interview with Politico, Gov. Gavin Newsom (D-Calif.) asserted that “It sickens me to the core you just socialize and nationalize Intel.” Newsome went on to add that the “nationalization of private industries is something they’re pretty good at in China.” 

Criticism has not only come from the left. Many GOP members have voiced concern over the deal. “If socialism is the government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?” Sen. Rand Paul (R-Ky.) expressed on X. “Terrible Idea.” 

 IB Global Politics teacher Dr. Jorgensen states, “I think the federal government partnering with private companies such as Intel is a deviation from the norm in America. This is something we see in other countries but not something that has been normalized here. It is not necessarily bad in the way that it has been likened to China. Countries like France do it, but it is unusual for it to happen here.” 

Chris’ Thoughts 

I believe that the federal government should not take large stakes in private companies, as it has done with Intel. This idea of direct government investment in individual businesses undermines America’s enduring commitment to laissez-faire principles, where market forces—not state intervention—decide success or failure.  

Such arrangements spur “too big to fail” scenarios: when a company starts to fail, the government, which is now a shareholder, will be incentivized to pour endless taxpayer money into the struggling firm to protect its investment. This leads to a federally subsidized, publicly traded company that is solely reliant on political backing. The company’s reliance on government subsidies erodes any sense of accountability, insulating the company from bad decisions.  

Additionally, once the government becomes a shareholder, politics will inevitably trump proper business judgement. Government actors will be able to continue subsidizing losses in the name of policy priorities rather than profitability. 

Unlike government contracts or tax incentives, which support companies without giving the federal government any ownership or control, taking equity makes the government a partial owner. With contracts, companies remain accountable to the market, and business failure is borne by private investors. Equity stakes, on the other hand, create potential for politicization in company decisions. It will also reduce the discipline that market competition generally enforces.   

Furthermore, private investors (i.e. when Donald Trump still operated in the private sector) assume the risk of their own ventures. If a company fails, they are the ones to pay. However, if the federal government invests in a company like Intel, it is the American taxpayers who will end up paying the price of failure. 

President Trump has floated the idea of emulating this move with other prominent American companies, thus creating a sovereign wealth fund similar to that of Middle Eastern potentates or resource-dense countries like Norway. This is a bad idea. America is not built on state-owned resources; its strength comes from private enterprise and open competition. A sovereign wealth fund would stymie innovation by protecting companies from risk while placing the financial burden of failure on taxpayers. 

This decision ultimately underscores a broader problematic trend of the centralization of power within the executive branch. In this and many other cases, Trump unilaterally made economic moves without congressional approval. Such actions undermine the core tenets of the constitutional republic and defy the original vision of the Founding Fathers. I worry that this move, in particular, may mark a step away from free market capitalism and a step towards cronyism.