The Government’s Intel Stake Is Antithetical to American Greatness

Sold as a pragmatic and fiscally responsible way to shore up national security, the $8.9 billion equity investment marks a troubling departure from the economic policies that made America prosperous and the world’s undisputed technological leader.

The deal converts previously committed Chips Act grants into government equity, with Commerce Secretary Howard Lutnick arguing that the change will ensure American taxpayers get “a piece of the action.” But this superficially appealing logic ignores the many risks that arise when the Uncle Sam becomes a private company’s biggest shareholder — including dangers for the company itself.

The most immediate risk is that Intel’s decisions will increasingly be driven by political rather than commercial considerations. With the U.S. government as its largest shareholder, Intel will face constant pressure to align corporate decisions with the goals of whatever political party is in power. Will Intel locate or continue facilities — such as its long-delayed “megafab” in Ohio — based on economic efficiency or government priorities? Will it hire and fire based on merit or political connections? Will research and development priorities reflect market demands or bureaucratic preferences? Will standard corporate finance decisions that are routinely (and mistakenly) pilloried in Washington, such as dividends or stock buybacks, suddenly become taboo?

These risks are already evident, and not just in historically underperforming government-owned enterprises such as Amtrak or the U.S. Postal Service. Intel chief executive Lip-Bu Tan agreed to the deal only after Trump demanded he resign over benign investments in China. Trump’s description of their Aug. 11 meeting says it all: “He walked in wanting to keep his job, and he ended up giving us $10 billion for the United States.”

The deal’s terms, meanwhile, are heavily tilted toward the government: It purchased shares at $20.47 instead of Friday’s $24.80 closing price — a discount at current shareholders’ expense. Intel’s board green-lit the below-market transaction without shareholder approval, showing how management now prioritizes government interests over fiduciary duties. And the deal allows the government to purchase an additional 5 percent of the company at $20 per share if Intel sells part of its struggling foundry business, thus distorting government and management views of specific corporate restructuring decisions.

The semiconductor industry, more than most, requires nimble responses to rapidly changing technology and market conditions. Intel already faces significant operational and competitive challenges; it has been a technological laggard for more than a decade as Nvidia, AMD, TMSC and other competitors have raced ahead. Adding a layer of political oversight to Intel’s already complex turnaround effort is far more likely to hinder than help.

The risks of the government’s Intel investment extend well beyond a single company. Other U.S. technology firms may now feel pressured to purchase Intel products, not because they represent the best technology, but to curry favor with or avoid being targeted by an administration that has a direct financial and political interest in Intel’s financial success.

Should Intel continue to falter, the government might intervene more directly in these transactions, for example by withholding tariff relief or export licenses until U.S.-based companies agree to put “Intel inside.” Recent Trump actions, such as demanding a 15 percent government cut of chips sales by Nvidia and AMD to China, show this possibility is more than a mere hypothetical.

Intel has expressly stated that its foundry business — the one in which the U.S. government is now extra invested — depends on finding customers, and now, Trump has a strong, and political, incentive to find them. Overall, this dynamic could lead to bad technology choices by private U.S. firms, ultimately weakening the United States’ long-standing tech dominance in global markets.

There are also risks for Intel’s U.S.-based competitors, who might find themselves at a disadvantage when vying for government contracts or subsidies, winning trade or tax relief, or complying with federal regulations. Private capital might in turn flow to Intel (and away from innovation leaders in the semiconductor ecosystem) not for economic reasons but because Uncle Sam now has a thumb on the scale.

Then there are the broader risks that are sure to distort future private decision-making in unknowable ways. Will other companies that have received U.S. subsidies — trillions of dollars of which have been promised or paid since 2021 — alter their business practices to avoid or attract similar government intervention? Trump officials have already signaled they want to do more of these deals.

Will investors and entrepreneurs stay away from critical industries that might also see the U.S. government eager to get more involved? Will future presidents, Republican or Democrat, use this noncrisis precedent to carry out their own adventures into corporate ownership with their own economic and social priorities attached?

All this undermines the risk-taking and innovation that have made American technology companies global leaders, replacing free-flowing, market-based allocation of capital with second-guessing and brute politics. Apparently the lessons of the past about the perils of state incursions into the marketplace, from Russia to Venezuela, need to be relearned.

What started as an emergency pandemic response to a U.S. chip shortage, with sincere security foundations, has evolved into government ownership of private enterprise — a transformation entirely predictable for anyone familiar with U.S. industrial policy history and precisely the mission creep that Chips Act critics warned about from the beginning.

Yet, America’s technological leadership emerged not from government direction but from competitive markets rewarding innovation and punishing corporate mistakes and inefficiency. If national security demands Washington support U.S. chipmakers, many policies — market and nonmarket — can achieve that objective while avoiding the risks raised by the Intel equity stake.

Congress should recognize this dangerous trajectory and reject the Intel deal before government ownership becomes the norm in strategic American industries and U.S. economic leadership is lost. Or is it too late for Congress to stand up to this White House?