Elections & Politics Brief #194 | Nate Iglehart | September 11, 2025
Summary
In a surprise move, on August 22nd Donald Trump’s administration and the global technology company Intel announced a deal. In it, the United States government will make an $8.9 billion purchase of Intel stock, giving it around a 10% stake in the company.
While this isn’t the first time in history that the U.S. government has made such a move, it has raised eyebrows among many experts, and especially among Trump’s own voter base, who see this as an unfair manipulation of the free market or simply as just a “terrible idea”.
The move is not mindless, however, and with signs pointing to more government stock purchases in the future, the Trump administration is flexing its power to interfere where it wants, when it wants, and how it wants more than ever.
Analysis
To begin, the deal itself doesn’t mean that Trump has a say in what business decisions Intel makes. As part of the deal, that 10% ownership does make the government the single largest shareholder, but it takes the form of what is called “passive ownership.” The government gets no Board representation or other governance or information rights, while also agreeing to vote with the Company’s Board of Directors on matters requiring shareholder approval, with some exceptions.
The money that the government spent on acquiring those stocks came from converting billions of dollars in grants to Intel, via the CHIPS and Science Act under President Biden, into equity.
There are also clauses in the deal that include a five-year warrant for the government to get another 5% of Intel stock if the company reduces its ownership of its manufacturing arm below 51%. This is seen as a move for the government to maintain control of that manufacturing part of Intel’s business, namely its production of computer chips.
This aspect, the domestic production of computer chips, is seen as the driving force behind the deal. Both Biden and Trump, as well as leaders in Europe and across the world, have realized the importance of computer chips and especially semiconductors in everyday life. From cars and iPhones to advanced weaponry, in recent years they have been deemed a matter of national security.
Most semiconductors are produced in Taiwan, although Trump has said that increasing domestic production of semiconductors is a national security priority, given their central role in products ranging from cars and iPhones to weapons and medical machinery. Currently, most of the world’s chips are produced in Taiwan, and China’s market share of the industry is growing. With the current tariff wars, empowering a domestic semiconductor and computer chip industry is generally seen as a prudent move.
Intel, being a leading player in the industry, has recently fallen by the wayside in the market after laying off 15% of its staff over the summer and failing to meet profit goals for a while now. With a major domestic computer chip manufacturer failing, the Trump administration saw an opportunity to bolster the domestic industry through buying its stock.
Government control of a critical industry is rare in American history, but not unheard of. In both World Wars, the government seized control of rail and telegraph networks while also nationalizing industries like coal mining. Far more recently, during the 2008 financial crisis, the government took ownership stakes in insurers like AIG and automakers like Chrysler and General Motors to rescue them.
What is different this time is that the move to take government control of Intel comes before any crisis has occurred. Additionally, the move represents a rapid about-face regarding Trump’s relationship with Intel’s CEO, Lip-Bu Tan, who Trump said should resign days earlier over his connections to Chinese companies.
With the timing of the move being unprecedented in its early implementation, voters and representatives across the board have had mixed reactions. But oddly enough, in the opposite way one might think.
On the right, senators like Rand Paul have called the move a “big mistake” that is a “step towards socialism”, while Tom Tillis said that he “[doesn’t] believe that the U.S. government should be picking winners and losers because you won’t always be right.” The conservative leaning National Review also published an editorial titled “The Government Shouldn’t Get into the Chip Business.”
On the left, the move has drawn an extremely rare amount of praise for Trump. Senator Bernie Sandersoffered tepid praise of the move, in part because it mirrors an amendment to the CHIPS Act that he and Senator Elizabeth Warren put forward years ago that would have required companies receiving funding via the bill to issue warrants or equity stakes to the US government.
Other progressives, like Representative Ro Khanna, see the positives of the deal but say it is an incomplete move. But the positives are there nonetheless. For starters, the move does have a chance of stabilizing Intel by giving it breathing room to rebuild its foundry arm, something that has run at a loss for a while now.
More importantly, if the Trump administration genuinely wants to stimulate a domestic semiconductor industry, government backing is a crucial factor according to experts. Many other countries have a similar setup regarding government backing of their own semiconductor industries, and Taiwan is a shining example of its success.
The move is not without its risks however. If Intel continues to struggle, then government money (and by extension taxpayer money) can get caught up in a failing business.
Michael R. Strain, an economist with the conservative-leaning American Enterprise Institute, also raised the possibility of government funds being difficult to remove from this arrangement because of a reluctance to let Intel collapse. While the Biden administration had conditioned the money on Intel reaching milestones, the Trump administration has removed those protections as well.
But with this deal now signed and on the books, Trump has signaled a full-steam-ahead posture moving forwards, with his economic advisors hinting that this deal could be the first of many such deals.
While he has made previous deals with similar setups, like the “golden share” agreement with Nippon Steel and a Pentagon deal with a domestic rare earth magnets company, the Intel deal is the largest one so far.
It has tangible upsides, regarding both national security and industry, but it carries with it gambles that could rear their heads should things go wrong. But regardless of its efficiency, it represents a slowly growing trend of the U.S. government toying with nationalizing industries. How both sides react going forwards, and if this practice slowly becomes a bipartisan issue, are both questions whose answers only time will show.
Engagement Resources
- The National Bureau of Economic Research is an American private nonprofit think tank focused on economic research.
- The S. Semiconductor Ecosystem Map, run by the semiconductor trade association and lobbying group SIA, tracks the industry across the U.S.
- The Intel Lay-off Tracker, run by the coalition of organizations known as CHIPS Communities United, tracks the health of Intel.