Up until now, the U.S. has mostly kept its hands free of taking direct stakes in privately-run companies. Now, it’s the largest shareholder and champion of an ailing chipmaker.
On Friday, Intel announced an agreement with the U.S. government that allows Washington to take a 10% stake in the company’s once-formidable business. The $8.9 billion sum from the Trump administration renders the U.S. the largest stakeholder in Intel. However, the federal government is a passive stakeholder, meaning it has no governance rights, such as a seat on the company’s board of directors.
Now, the U.S., under President Donald Trump, joins China in its promotion of “national champions,” multinational companies in strategic sectors that advance their government’s national interests. The Semiconductor Manufacturing International Corporation (SMIC) is viewed as China’s advanced chip-making champion. This type of agreement is common throughout Europe, too.
“Once the U.S. government has an active stake in the success or failure of a company, it’s pretty hard to argue that it isn’t a ‘national champion,'” said Scott Lincicome, an economics and trade expert at the libertarian-leaning Cato Institute. “I don’t really think there’s any way to say it’s not a national champion now, much like SMIC.”
In China and European nations, free markets intermingle with the state to produce differing variations of state-managed capitalism. Government intervention in the private sector is more frequent in those environments. Some analysts view the Intel stake as a big, risky gamble for the U.S.
“The state has already put down some money, and the tendency is to give it more support,” said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. “[It’s] very, very difficult for countries to walk away from failed projects. Sometimes they do, but it takes a lot of failure.”
National champions of industry are part of the landscape in business. Brazil has long had a direct stake with veto power in Embraer, a jetmaker that’s the third-largest producer of commercial aircraft globally. The U.K. has a so-called golden share that hands it similar managerial rights in defense company BAE Systems. Earlier this summer, the U.S. government locked in a golden share in Philadelphia-based U.S. Steel.
Trump has felt at ease widening government authority into the private sector throughout his second term. He initially demanded that Intel fire its CEO, Lip Bu-Tan, over his past ties to the Chinese military. Historically, the U.S. government had tended to eschew outright intervention in the economy, except in special cases of enormous peril — such as when it took stakes in automakers and large banks in the 2008 financial crisis. Washington has had a mixed record on promoting national champions.
Bill Baer, a visiting fellow in governance studies at the Brookings Institution, cited the collapse of a past version of AT&T. It once operated as a monopoly with the blessing of the U.S. government in the 20th century because it provided a universal service. However, the company was opened up to increased competition, and it lost its edge. AT&T was broken up four decades ago into local service providers and soon bought out by a competitor in a slimmed-down form.
“AT&T basically did not survive in its present form,” Baer said. “It was not prepared to compete with companies based in the U.S. and based outside the U.S.. It got bought up by one of the local Bell operating companies.”
Intel has had a downward trajectory for the past two decades. Once, it was the top supplier for domestic chips that powered U.S. computers at the start of the millennium. But a series of corporate missteps caused the company to miss out on the smartphone and later the AI revolution. Intel’s stock has shed close to half of its value since 2020, and rivals such as Nvidia are at the forefront of AI chipmaking. The chipmaker has also had to grapple with Trump’s brand of capitalism and agreed to hand a portion of its revenue in China to the U.S. government.
Still, other experts argue that the U.S. should be able to take stakes in certain companies if there’s a clear objective behind it that benefits the U.S. and taxpayers.
“I think there’s nothing inherently oppositional to the government owning stakes in a company,” Alex Jacquez, a chief policy and advocacy at the left-leaning Groundwork Collaborative and former White House aide to President Joe Biden. “I’m not sure the government has articulated why this would make things better for Intel. And so I’m still kind of waiting for the strategic rationale behind it.”
The Intel arrangement might indeed be duplicated for other U.S. companies, particularly those that accepted federal subsidies or grant money. “I want to try to get as much as I can,” Trump said Monday in the Oval Office. “I hope I’m gonna have many more cases like it.”
White House economic advisor Kevin Hassett said earlier in the day that it was “absolutely right” that the U.S. government could follow up with other deals.