Why Trump’s Intel deal breaks American tradition

Donald Trump is bringing the U.S. government into the computer chip business.

He announced that the federal government will acquire a 10% stake in Intel, a Fortune 500 company that is one of the largest semiconductor manufacturers in the United States. He hinted that the U.S. may not have completed its stock portfolio.

“I will make such a deal for our country all day,” he wrote on the social media website. “I will also help companies that have such profitable companies with the United States.”

Trump’s position is against what he calls “stupid people”, a group that includes political rights.

“When the left does that, you can’t just oppose socialism,” said Erick Erickson, a conservative broadcaster. “So, if you support socialism, obviously Donald Trump is your guy.”

Trump’s move is arousing such criticism because it breaks with American tradition and conservative orthodoxy in small governments. Some economists warn that he hopes to help companies that deal with the U.S. government improve the potential for corruption and market inefficiency.

“You are looking at investment decisions that have to be made now based on politics, not economics,” said Tad Dehaven, an economic policy analyst at the Cato Institute, a liberal think tank. “This injects government directly into the lifeblood of decision-making in large companies.”

Although Trump said the U.S. paid “zero” for about $9 billion in non-voting Intel stock, the deal is far from a gift. The U.S. designated free construction grants designated by the CHIPS Act 2023 (a legislation aimed at transforming domestic semiconductor manufacturing) into Intel stock.

Trump’s actions are not entirely without precedent. During the 2009 financial crisis, the United States gained partial ownership of General Motors, Citigroup and AIG to prevent these companies from collapsing. Presidents George W. Bush and Presidents Barack Obama believe that the interventions are justified because emergency operations are taken temporarily to prevent a national economic collapse.

Although the Trump administration interprets Intel’s move as an action to protect industries that are crucial to national security, just like the president’s decision to impose tariffs on U.S. cities, deploying the National Guard to U.S. cities and replacing theoretically independent public officials, the legitimacy of this move lies in his assurances, far from being small.

“It’s not about making Intel stronger, it’s about controlling it, maybe making more money,” said Robert Atkinson, president of the Information Technology and Innovation Foundation.

If the state interests of private companies are unusual for the U.S. government, it is not uncommon elsewhere. China and Russia invest in their domestic companies. Even European democracies have support for what they believe to be major industries, such as aerospace, communications and energy.

On Tuesday, Commerce Secretary Howard Lutnick outlined a similar strategy saying the U.S. is considering gaining equity in defense and ammunition contractors.

“Lockheed Martin gets 97% of the revenue from the federal government,” he said. “If we add basic value to your business, I think it’s fair to Donald Trump consider the American people.”

Another Trump economic adviser, Kevin Hassett, has proposed a bigger plan – such government intervention is the first step in building a U.S. sovereign wealth fund.

The president often admires investment funds directed by other countries, such as China and the Gulf Monarch, as an effective means of generating government revenue.

Although he has not urged Congress to formally authorize the creation of the U.S. fund, Intel’s investment model may offer an alternative route without the need for oversight and regulations that accompany Congress’ actions.

“I’m sure there will be more deals in this industry in some time, in other industries,” Hassett said.

As part of the Japanese purchasing company purchase, the government’s “gold share” in U.S. steel, profit cuts in advanced microchip sales by NVIDIA and AMD, and commitments to foreign investment in U.S. industry can provide more assets to the fund.

Trump released the Truth on the Truth Society last month, “South Korea will donate $35 billion to the United States to be owned and controlled by Americans as president.”

While Trump often touts his trading ability and financial knowledge, Richard Stern of the Conservative Legacy Foundation said state control rarely matches the performance of free market capitalism.

“Even if he was the most talented businessman ever, the fact is that the part that makes the business so successful is the professionals. They know this kind of business, that product, the field,” Stern said. “In every business in every industry on earth, no one can universally perfect.”

So far, few Republican politicians – including politicians in Congress, can argue for oversight authorities – against the president’s new interests in capitalism governing the state.

Senator Rand Paul of Kentucky is an occasional Trump critic, a notable exception.

He wrote on X: “If socialism is the government that has the means of production, will it take a step towards socialism with part of Intel?”

As if to drive home, Vermont Sen. Bernie Sanders (professed to be a socialist) supported Trump’s move.

“U.S. taxpayers are entitled to a reasonable return on investment if microchip companies profit from generous grants received by the federal government,” the former presidential candidate said in a statement.

The prospect of Trump’s implementation of these latest actions could be wielded by a future Democratic president, another reason some conservatives are uncomfortable.

“When the government owns 10% of Intel’s shares, is there anyone who thinks they’ll be idle and there’s nothing to say about Intel’s policies on green technology, diversity, corporate responsibility?” Tehwain said.

This doesn’t seem to stop Trump, whose efforts may be part of a bigger strategy, or just businessmen are eager to step into places he can – whether it’s guiding government investments, suggesting Coca-Cola to change its soft drink formula, or suggesting a cookie barrel to its old logo.

“Everyone is running around -ism – socialism, socialism, state capitalism,” DeHaven said. “At the end of the day, it’s Trumpism.”