Matthew Lynn is a financial columnist and author. He writes for the Daily Telegraph and the Spectator in London.
Back when he used to own casinos, Donald Trump would have recognized the type immediately. A guy from a small town visits the tables for the first time, wins a couple hundred dollars on the first spin of the roulette wheel and thinks he’s a genius. By the end of the evening, he has lost his life savings while the house celebrates some easy profits.
That same story is about to play out, except this time the victim won’t be some small-town loser gambling away his retirement fund, but rather the government of the United States and the American taxpayer.
Last year, the president made a decision that was unusual even by his erratic standards. At his behest, the U.S. government took a nearly 10 percent stake in the chip manufacturer Intel in exchange for $8.9 billion in government grants. The company, which in its heyday helped create the computer age, needed the boost — it had been struggling for some time. In February 2020, the company’s stock traded at $66 a share, but by April 2025 it was trading below $20. Pat Gelsinger, Intel’s chief executive, was forced out at the end of 2024 after the board lost confidence in his plan to turn the business around.
Back in the day, the sticker saying “Intel Inside” was how you knew you could trust your laptop to work reliably. But technology moves fast, Intel slowed down, and by last year the age of artificial intelligence had seemingly left it far behind. The company needed grants and subsidies from the government to reboot the business.
With the new government investment, the company has seen a dramatic turnaround. April alone saw Intel’s stock price rise by more than 100 percent. Apple recently struck a deal with the company to make chips for its devices, and Intel is finally getting into the AI business dominated by its rival, Nvidia. With Intel back in the game, the U.S. government’s stake has made a $40 billion profit in less than a year. Trump is so pleased with the deal he now thinks he should have taken a bigger slice of the company.
That’s great, right? A major American company is riding high again. The U.S. has clawed back competitiveness in one of the biggest and most strategic industries of the 21st century. To cap it all off, the government has made a big pile of money it can spend on tax cuts, better public services or even paying off a little of the national debt. What’s not to like?
Well, quite a bit, as it happens. The problem is this investment is going to make Trump and all the officials around him believe they are really good at this kind of thing.
Emboldened by one major success, they will be tempted to buy shares in all kinds of businesses. A few percent of Ford? A stake in Boeing? Why not American Airlines? Or a position in Pfizer and JPMorgan Chase? These are all great American companies, and with the White House as a champion and a supportive shareholder, they could do even better. Indeed, the administration recently announced a $2 billion investment in a range of quantum computing companies. It is already starting to believe its own hype.
The trouble is, as with all investing, for every Intel success there will be a dozen failures. Even worse, these government stakes in various companies distort the market.
The government is supposed to make and enforce the rules of a free and open market. It should be the referee, not a player. If the referee becomes a shareholder in a string of companies, that will no longer be possible. Will the White House really be able to regulate the chip industry fairly while invested in one of its major companies? If you have a start-up with a fantastic new technology, would you get a fair hearing if you complain that Intel is abusing its position? Probably not.
The more industry is owned by the state, the less the state will promote free and fair competition. Instead, government will be more tempted to rig the rules in favor of the companies it holds a stake in.
Intel is doing better, and that’s great. But this lucky break will only encourage the White House to invest in more companies. And that is a terrible thing for American capitalism.
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