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Joe Lonsdale, the cofounder of Palantir and founding partner of Austin-based venture capital firm 8VC, said Thursday he was “uncomfortable” with the government’s $8.9 billion investment in Intel.
“It’s very weird, of course, for the government to be taking a stake in something,” Lonsdale said on CNBC’s Squawk Box. “It’s also a little bit weird for the government to be giving $9 billion to a company, too.”
“It’s cronyism in some form,” he added. Cronyism, the milder cousin of nepotism, is the practice of giving jobs and benefits to friends.
The funds are coming in part from the US CHIPS and Science Act, a 2022 law that provides $52 billion in subsidies and tax incentives to encourage domestic chip production and factory construction.
Intel said in a press release that the “government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the US CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program.” The Secure Enclave program is designed to expand US semiconductor manufacturing.
It’s highly unusual for the US government to purchase a stake in a private company. It typically only happens in times of serious distress, like the 2008 financial crisis. The investment in Intel, however, isn’t coming during a national emergency, possibly setting a new precedent.
National Economic Council Director Kevin Hassett told CNBC last month that more investments in other companies are possible and likened the Intel stake to a sovereign wealth fund. Many countries have such funds, which invest in companies, among other things, and redistribute surplus earnings to citizens. “There’ll be more transactions, if not in this industry, in other industries,” he said.
Lonsdale said he isn’t sold unless there is a broader public benefit, like bolstering national security. If that’s the case, there’s no reason for the government “not to take things,” he said.
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