The Intelligence of the Intel Equity Stake
The White House’s sudden decision to take a ten percent stake in Intel startled some observers as a surprising lurch to government overreach by a Republican administration. In truth, it looks less like a lurch and more like a pilot program for an idea economic nationalists have been refining for years.
Julius Krein, editor of American Affairs, has been arguing that America’s capital markets are structurally incapable of funding the industries the nation actually needs. Last week’s deal gave him a live-fire case study.
For decades, U.S. corporate strategy has been to maximize shareholder value, not profits, Krein has argued. The two overlap only sometimes. That’s why companies cling to hurdle rates of fifteen percent even when the true cost of capital is half that. A project that could return a solid seven or eight percent will be passed over, because it drags down return-on-assets ratios and puts the multiple at risk.
The result is chronic underinvestment in precisely the sectors that matter most: capital-intensive industries like chips, energy hardware, aerospace, and defense. Wall Street prefers “asset-light” software firms, where margins are fat and capital commitments small. Nikefication—separating design rents from the messy work of production—became the model. America congratulated itself on “tech dominance” even as it outsourced the industrial backbone to Asia.
The outcome is visible in the semiconductor market: Intel hollowed out, Taiwan’s TSMC in command. Conventional subsidies barely scratch the surface because the market structure itself tells executives not to invest no matter how much Congress appropriates.
Krein’s Fix: A Sovereign Wealth Fund
Krein’s answer is not just more grants but a new institution: a U.S. sovereign wealth fund or development bank, modeled on the “IFCUS” legislation Vice President Vance once championed. Instead of writing checks that vanish, such a vehicle would take loans, guarantees, or equity stakes in critical industries, recycle returns, and permanently crowd in private capital.
The logic is straightforward. A $50 billion appropriation, leveraged, could mobilize hundreds of billions. Unlike one-off grants, a portfolio fund adapts, experiments, and reinvests. It fills the “scale-up gap” where America excels at R&D only to watch commercialization flee overseas for lack of financing. In Krein’s words, “making America great again requires making investments in critical capital-intensive sectors attractive again.”
Intel’s deal looks improvised, but in substance it mirrors this template: convert CHIPS Act grants into equity, align taxpayer risk with taxpayer reward, and de-risk a scale-up stage that private markets won’t touch.
There Are Risks, But It Isn’t Socialism
That doesn’t make the Intel stake flawless. A bespoke, personality-driven negotiation is a poor substitute for a rules-based fund with a clear mandate. Left in Trump’s hands alone, it can mutate into deal capitalism—leaning on Apple to use Intel fabs before they’re competitive, jawboning CEOs in the Oval Office, distorting rather than strengthening the sector. In the hands of a left-wing president, the equity stake could be used to pressure a company into sacrificing production to lower carbon emissions or chase a DEI quota.
But it is worth noting this was already a risk with the pre-existing system of grants, loans, and tax-breaks. Government funding always comes with strings, and the Biden administration was not shy about using its industrial policy to advance climate and diversity goals. There’s no reason why a non-voting equity stake should lead to more interference than a loan or grant. In fact, because the equity stake is permanent capital, it could mean less leverage over day-to-day business than a grant tied to annual reporting.
The other objections heard from self-styled capitalists on the right invite similar responses. Is the government “picking winners and losers” when it purchases an equity stake? No more so than when it hands out subsidies. Will companies innovate less if they think Uncle Sam stands ready with a bailout? That risk already exists in a grant-driven regime.
Some say equity stakes encourage reckless risk-taking. Perhaps—but that’s a feature, not a bug. America’s real problem is too little corporate risk-taking in hard industries, not too much. If government equity tips the scales toward bolder bets in semiconductors, it will have done something the market has conspicuously failed to do.
The charge that a government equity stake in a publicly traded company is, as some critics have said, a “hallmark of socialism” is deeply unserious. Socialists didn’t agitate for Washington to hold ten percent of Intel stock with no voting rights. They wanted the state to own and operate the means of production outright. A non-voting equity stake that recycles taxpayer risk into taxpayer return is not collectivization—it’s closer to what any hard-nosed investor would demand if asked to pony up billions. Calling this socialism is like calling a dividend check communism.
More concerning is the idea that the government may lose track of the national interest, chasing financial returns instead. The whole point of a sovereign wealth fund is not to maximize profit but to make viable those capital-intensive projects private finance won’t touch. The market can chase earnings quality. Government should be prepared to back ventures that might fail outright but still build capacity, deepen supply chains, and create national resilience. Sometimes we want the government to pick “losers” instead of “winners.”
Similarly, there’s the risk government might hesitate to discipline its own investments. Would Washington bring a discrimination suit against Intel if it knew the settlement would ding its shareholding? It must—and it should be clear about those rules from the start. Transparency and guardrails are the difference between smart industrial policy and cronyism.
Looking Beyond Intel
The sovereign wealth fund model at least disciplines the process: transparent criteria, non-control minority stakes, performance metrics (yields, anchor customers, crowd-in ratios), and time-bound exits. Done this way, government equity isn’t socialism. It’s a financing innovation designed to overcome Wall Street’s allergy to capital investment.
The Intel move is best understood as a prototype. It operationalizes Krein’s long-running critique of American finance and his call for a sovereign vehicle to restore industrial scale-up. The caution is obvious: execution matters. An ad hoc stake taken by presidential fiat risks politicization. A permanent, institutional fund with guardrails could anchor a genuine techno-industrial revival. But you have to start somewhere, and this looks like a decent start.
If Washington can build an institution to carry the logic beyond one-off deals, the Intel stake may be remembered as the beginning of a financing revolution—not just another chapter in corporate subsidy theater.
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