President Trump’s ownership of a 10% stake in Intel has redefined the relationship between the U.S. government and major businesses, creating a polarizing political debate. The move has made the United States the chipmaker’s largest shareholder, an action that critics, including many within the GOP, have denounced as a slide toward socialism. They argue that such government intervention resembles the policies of socialist regimes like China and Russia, where the state controls key industries. However, Trump insists the investment is a strategic economic move, claiming it will help the U.S. industry and increase national wealth. The financial implications of the decision are significant, as Intel’s stock has risen by 4% following the announcement, though the company’s share price is still down from its value at the start of 2024.
The reaction to the Trump-intel deal has been mixed, even among Republicans. Larry Kudlow, a former economic adviser to Trump, has expressed discomfort with the government’s role in backing businesses, warning that such involvement could lead to unintended consequences. Similarly, other advisors, like Steve Moore, have criticized the move as a form of corporate welfare, arguing that the government should not be buying assets but instead divesting them. Despite the pushback, Trump is optimistic about the outcome, telling his supporters that this deal could be just the beginning of more similar investments. The administration’s plan is to convert almost $9 billion in grants, earmarked by the Biden administration’s bipartisan Chips Act, into a 10% equity stake. This shift, however, raises concerns about how the government will manage its role in a private company, given the potential for interference in business decisions.
Intel, which has faced financial challenges and recently announced plans to lay off 15% of its workforce, has been under pressure due to ongoing market fluctuations. The company’s recent stock performance, while temporarily boosted, reveals a broader trend of decline over the past year. The U.S. government’s stake in Intel has also raised concerns about regulatory oversight and potential limitations on future grants. The company has warned investors that the arrangement could affect its global sales and operations. Meanwhile, Trump’s decision to take a stake in Intel is viewed by some as a continuation of his broader economic strategy, which has included rescuing struggling industries like Chrysler and General Motors. However, the recent move represents a departure from traditional free-market principles, as it signals a new era in which the government may play a more active role in shaping corporate strategies. This change has the potential to influence the business landscape for years to come.