The federal government has a hard enough time doing the things it should do: securing the border, winning wars, collecting taxes, administering the capital city. It doesn’t need to take on the difficult and nongovernmental task of turning around a struggling semiconductor company.
The Trump administration is reportedly considering taking an equity stake in Intel at public expense. This would be in exchange for the grants the company is already due to receive under the CHIPS Act.
By the way, remember the CHIPS Act? The law that was enacted three years ago for the supposedly urgent task of re-shoring semiconductor production? In those three years, the government has distributed almost no money for that purpose. As we said at the time, the law was so loaded up with extraneous provisions and deficient in specific anti-China provisions that it was never going to a present an effective challenge to China’s chipmaking ascent.
The main Intel project that the CHIPS Act was supposed to support, a facility near Columbus, Ohio, is little more than a hole in the ground. Intel has been in the process of a corporate turnaround strategy since before the CHIPS Act was introduced. It hasn’t gone well. CEO Pat Gelsinger was ousted by the company’s board last year. Intel has already announced that it would be cutting thousands more jobs than the CHIPS Act funding was ever supposed to create.
Intel has been struggling for more than a decade, having become complacent after years of dominance making chips for personal computers and missing multiple technological shifts. The company got beat by competitors in producing newer, advanced chips and took on massive debt to expand its manufacturing business with limited success. Intel’s stock price tumbled by over 50 percent between early 2021 and early 2023, then, after a brief spike, has declined by over 50 percent again since the beginning of 2024.
Looking at that sad situation, the Trump administration wants a piece of the action. Rather, it wants to use your money to get a piece of the action.
The White House said it was entertaining the U.S. taking a 10 percent stake in Intel, a roughly $10 billion investment at the company’s current valuation. A government $37 trillion in debt and running a $2 trillion deficit has no business playing investment manager with even more borrowed money. And the idea that what Intel really needs to fix its long-running problems is the managerial genius of the federal government is laughable.
This country does not lack for private investment. Real gross private domestic investment was over $4 trillion last year, more than double what it was in 2010 after the financial crisis. And the U.S. remains the world’s top destination for foreign investment. In fact, Intel just secured $2 billion from Japanese investor SoftBank.
But the problem with private investment, from the government’s point of view, is that the government doesn’t get any control along with it. Trump has called for the firing of Intel’s new CEO, Lip-Bu Tan, only to seem to change his mind after Tan visited the White House. Secretary of Commerce Howard Lutnick has said the government wouldn’t meddle with Intel’s business decisions, but, if so, there would be little point in becoming a shareholder.
If the only purpose is to endorse Intel as a “national champion,” the government would be picking a likely loser. If the purchase of shares would come with any control over the corporation, the government would be way out of its depth. No leaders of a private company that is struggling have ever thought to themselves, “You know what we need right now? The federal government to become our largest single shareholder.” Unless, that is, they are convinced that the company is doomed and want to reduce their responsibility for the failure.