It was about one year ago that the Trump administration announced a truly eye-opening transaction: In return for an $8.9-billion investment in the chipmaker already authorized under the Biden-era CHIPS Act, the government would take a roughly 10% stake in Intel shares — making the government Intel’s largest shareholder.
Was this a good deal?
For the U.S. taxpayer, the answer is yes — from the standpoint of paper profits. The 443.3 million Intel shares the government acquired for $8.9 billion are currently worth nearly $44 billion on the open market.
But that comes with a host of drawbacks. One is the possibility that Trump will interfere with management decisions at Intel — as he attempted to do even before this deal closed. More important, the transaction poses questions about Trump’s industrial policy, as indecisive and obscure as it is. The administration’s portfolio of direct and indirect investments now numbers 30 public companies and is valued at about $27 billion.
That’s an unprecedented level of government participation in the operations of U.S. corporations, placed in the hands of a single person whose business judgment is, to say the least, dubious.
“We have a golden share, which I control,” Trump proclaimed in describing his authority over the operations of U.S. Steel, which he acquired after approving the company’s acquisition by Nippon Steel in June 2025.
The scale of this program makes even conservatives uneasy. The libertarian Cato Institute has been outspoken about how the government’s taking ownership stakes has become worrisomely “routine.”
Cato policy scholar Tad DeHaven doesn’t buy the White House assertion that the program is aimed at protecting such strategic industries as semiconductors, minerals and quantum computing.
Rather, he wrote, “The Trump administration’s ‘strategic stakes’ policy is a deliberate attempt to shape corporate behavior and obtain leverage under the guise of bolstering domestic capacity in semiconductors, critical minerals, and other industries.”
Nor are voters especially jazzed. According to a survey by CNBC published last month, some 49% of U.S. voters consider it inappropriate for the government to own pieces of U.S. companies; only 19% thought it all right.
Not all of Trump’s deals have involved outright grants of equity. His first deal, announced June 12, 2025, was triggered by a plan for Japan’s Nippon Steel to acquire U.S. Steel. The merger was blocked by the Biden administration, but Trump revived it with a key condition: He was given what Scott Lincicome of the Cato Institute labeled “decisive control” —i n effect, a veto —over many management decisions.
These included any decision to relocate U.S. Steel’s headquarters out of Pittsburgh, to close one plant earlier than mid-2027 or any other plants before mid-2035, or to cut prices below a given point. The government also got the right to appoint one independent director and mandated that a majority of the board would be U.S. citizens.
Lincicome judged these strictures to be tantamount to the “nationalization” of U.S. Steel. “U.S. Steel will have to obtain Uncle Sam’s permission to do a lot of stuff,” he wrote.
Then there are the deals Trump cut with chipmakers Nvidia and AMD. Rather than take an equity stake in the companies, Trump demanded a 15% share of any revenues the companies collected from the sale of artificial intelligence chips to China as the price for his approving the sales. Some have questioned whether those arrangements are legal or even constitutional; they could be regarded as export taxes or duties, which are specifically prohibited by the Constitution, according to the Tax Policy Center.
The administration defends its dealmaking as an economic boon in the long term. On July 29, announcing a sheaf of seven deals worth a total of $874 million in the semiconductor industry, Commerce Secretary Howard Lutnick called them “strategic investments” to “enhance our country’s domestic capabilities, create high-paying jobs and keep America at the forefront of the semiconductor industry.”
What has experts unnerved by these deals is the path they cut toward “crony capitalism” — the manipulation of the marketplace to benefit politicians or their friends and family members. The practice “may distort competition, stifle innovation, and potentially lead to monopolies or market concentration in strategic sectors,” as the Center for Strategic and International Studies put it. “Furthermore, the selection process itself for equity stakes may erode public confidence if the choices seem to be driven by political connections rather than strategic merit.”
Trump has even pondered the creation of a “sovereign wealth fund” (SWF) for the U.S., akin to those established by Saudi Arabia and Norway, empowered to make deals in the government’s name. On its face, that looks like an invitation to open corruption.
As Steven Feldstein and Jodi Vittori of the Carnegie Endowment for International Peace observed last year, “Considering the Trump administration’s self-dealing and erosion of accountability, there is an acute risk that the U.S. SWF could become a source of graft to reward Trump’s friends, coerce political support for his priorities and bring personal enrichment.”
Government investments also pose a dilemma for competitors of government-funded companies, which may be put at a distinct disadvantage if the government chooses to make policy to benefit its own holdings.
The most striking aspect of these deals is that, from a financial perspective, they’re totally unnecessary. None of the companies gifted with a government investment is in financial trouble; all have access to the vibrant U.S. capital markets.
What they gain from making the deals is access to Trump’s good graces. Intel and the other semiconductor companies receive funds already allocated from the CHIPS Act but still under Trump’s control; AMD and Nvidia got permission to sell chips to China.
The other side of the coin is their exposure to Trump’s whims — though he has often tried to impose his will even on companies without partial government ownership.
Indeed, Trump didn’t even wait for the Intel deal to be finalized before trying to stick his nose into Intel management. On Aug. 7 last year, he called for the immediate resignation of Malaysia-born Lip-bu Tan as Intel CEO, calling Tan “highly conflicted” because of his ties with Chinese companies.
Four days later, after Tan met with Trump, Lutnick and Treasury Secretary Scott Bessent, Trump reversed himself. In a post on his Truth Social platform, Trump declared that the “success and rise” of Tan was an “amazing story.” The government announced its equity investment in Intel on Aug. 22.
Intel replied to my question about whether Trump had gotten involved in any other corporate decision by asserting by email that the government’s investment in Intel “will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.”
As I reported at the time of the Intel investment, the government’s taking an equity stake in a public company isn’t unprecedented. In 2009, the Obama administration acquired 60.8% of General Motors in return for almost $50 billion in bailout funds. The government also acquired a smaller stake in Chrysler, which was subsequently sold to Fiat.
The government sold the last of its GM holdings in 2013, booking a direct loss of about $10.5 billion. But its bailout was deemed a success, given that it saved as many as 1.9 million jobs at GM, Chrysler and their suppliers.
Obama made clear that these were temporary emergency measures to save companies that faced extinction, and that the government would sell off its stock holdings as soon as that was practicable. As part of the bailout deal, the government orchestrated the exit of GM Chief Executive Rick Wagoner, oversaw the replacement of a majority of its board members and imposed compensation limits on its top executives.
Remarkably, congressional Republicans have been mostly silent about the growth of the government’s stock portfolio. That’s a big difference from yore, when the idea that Social Security could invest millions of dollars of its reserves in corporate equities raised the hackles of the GOP. At a hearing in 1935, Sen. Arthur Vandenberg (R-Mich.) threw up his hands in horror. “That,” he exclaimed, “would be socialism!”
But government socialism is back on the front burner today.
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