Donald Trump has a message for critics who think turning the U.S. government into a major stockholder of Intel is a “socialist” move: More is coming.
“I will make deals like that for our Country all day long,” the president posted on Truth Social after critics piled on, adding later about future ownership stakes, “I want to try and get as much as I can.”
One possible target: defense contractors, whom Commerce Secretary Howard Lutnick told CNBC Tuesday were ripe for the picking given the U.S. government is a big customer.
Free-market conservatives were already wary of Trump’s tendency to interfere in corporate decision-making by, for example, telling Apple where it should make iPhones, or even demanding a cut of Nvidia’s sales of chips to China. But the Intel move is a startling defiance of Republican orthodoxy that says governments shouldn’t try to pick corporate winners and losers and risk messing things up as owners by rewarding executives for politically smart but financially stupid decisions.
The U.S. government is getting a 10% stake in Intel through the conversion of billions in previously granted government funds and pledges, making it one of Intel’s largest shareholders.
“If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?” Republican Sen. Rand Paul said in a post on X. “Terrible idea.”
Scott Lincicome, a Cato Institute trade expert, says Intel could end up making decisions now to please Trump even if they’re impractical, say, by going ahead with plans to open a long-promised chipmaking factory in Ohio. And even short-term gains from government ownership, such as more companies buying Intel semiconductors, will hurt business in the end by saddling those companies with inferior chips.
“Intel might simply gain customers from folks that are looking to stay on Trump’s good side,” he said. “But innovation requires ruthless competition, an endless drive for an advantage — and now they might accept a disadvantage because they need the political win.”
Many Republicans remained silent on the issue, prompting others to suggest they are free market hypocrites.
“For so many of my self-described true conservatives, you’re going to have to explain to me how this reconciles with true conservatism and true free-market capitalism,” Republican North Carolina Sen. Thom Tillis told CBS in an interview. “I don’t see it.”
Early last year, the Biden administration agreed to provide Intel with billions of dollars in funding under the CHIPS Act for it to build semiconductor manufacturing factories around the country, part of a plan to produce 20% of the world’s most advanced chips in the U.S. by 2030, up from zero at the time.
Trump argues that he got the Intel stake for free by converting $11.1 billion of funding into the equity stake. He also notes that Intel shares shot higher after he struck the deal Friday, handing a big win to U.S. taxpayers.
“I love seeing their stock price go up, making the USA RICHER, AND RICHER,” Trump posted Monday morning before the stock trading began. “More jobs for America!!! Who would not want to make deals like that?”
The price of Intel stock fell slightly both Monday and Tuesday, and investors have reason to be cautious.
In a filing to its investors after the deal was announced, Intel warned that it may lose overseas customers reluctant to buy from a U.S. government-owned business. The company has lost more than $22 billion since the start of 2023 after largely missing out on the frenzy surrounding artificial intelligence.
James Secreto, a former Biden administration official who helped hammer out the CHIPS Act grants, said a falling stock price is a big danger given Trump’s tendency to measure his success and failure by gyrations in the public market and his willingness to jawbone companies to do things to help him politically.
“The Trump administration now owns Intel’s success or failure,” said Secreto, former Commerce Secretary deputy chief of staff. “The next question is how far will the U.S. government go to defend its equity postion?
He called the Intel stock purchase a “bridge too far” even for Democrats who believe government help is needed occasionally.
“For the sake of national security, we still need Intel to win on performance, not politics,” he said.
That Trump would be labeled a “socialist” by members of his own party is ironic given that he has long wielded that term against his opponents.
Yet in some ways the Intel move fits a pattern.
Trump has erected the highest tariffs in decades, a trading strategy that his party has long rejected, and has tried to influence corporate decisions the GOP used to say were best left to business owners. In addition to telling Apple not to shift production to India, he has gotten Coca-Cola to change ingredients and warned Walmart not to raise prices.
There have also been a series of moves that will directly benefit or hurt the government depending on how businesses perform.
In June, Trump struck a deal approving Nippon Steel’s takeover of U.S. Steel in exchange for a “ golden share ” that essentially gives the U.S. government veto power to ensure national security interests are protected against cutbacks in steel production. In July, he spent $400 million of taxpayer money on MP Materials stock to make the U.S government the biggest owner in the Las Vegas rare earths miner. Then earlier this month came his deal with Nvidia and AMD to give the U.S. government a 15% cut of revenue from selling certain chips to China.
A White House official who spoke on condition of anonymity to describe internal deliberations said the deals with Intel, Nvidia, and U.S. Steel are seen as one-offs, necessary moves because the companies have outsized importance to the country’s national security. The source likened the deals to the government’s departure from free market principles when it limits American aerospace companies from selling fighter jets to countries like China.
Some conservatives aren’t buying it.
“This isn’t about funding innovation,” said influential conservative radio host Erick Erickson on Friday. “It’s a paradigm shift towards socialism.”
In addition to Lutnick’s comments about targeting defense contractors, Trump’s top economic adviser has also said hinted about what is likely coming next. He said the president is interested in setting up a sovereign wealth fund in which federal government would invest in an array of companies.
“There’ll be more transactions, if not in this industry then other industries,” said Kevin Hassett, the director of the National Economic Council.
One prominent politician did voice support for the Intel deal, but it more likely hurts than helps Trump’s cause with Republicans.
“Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations like Intel without getting anything in return,” said Vermont Senator Bernie Sanders, a self-described democratic socialist and Trump antagonist. “The taxpayers of America have a right to a reasonable return on that investment.”
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AP reporter Michelle L. Price contributed from Washington.
