When Washington Buys Intel, It Owns You Too
The past week has seen many decrying the folly of government picking winners in business. But the Trump administration’s announcement of an 8.9 percent equity stake in chipmaker Intel is a reminder that government mostly picks losers.
Government money in tech doesn’t buy progress, global leadership, or even the fallback claim of defense capability and readiness – if it did, Intel would already be flying high.
Intel has been riding the America COMPETES Act subsidy train since George W. Bush signed the original bill in 2007, through Obama’s 2010 reauthorization (against which I testified in the House), to Biden’s CHIPS and Science Act incarnation in 2022. Donald Trump’s decision to twirl the CHIPS law from subsidy vehicle into an outright ownership stake marks nearly two decades of this government/business entanglement.
Semiconductor supply chain stability, reducing reliance on foreign foundries and economic competitiveness are the rationales for converting $5.7 billion in unpaid CHIPS Act grants into equity. An additional $3.2 billion from the Pentagon’s Secure Enclave program heralds more weaponized and militarized AI. Meanwhile, export controls are the “reward” for the actual AI chip success story—NVIDIA—which is not to blame for Intel’s domestic foundry foundering.
Trump’s partial nationalization of Intel (433 million shares of common stock) escalates an already troubling trend: that of moving away from competitive enterprise and toward public-private partnerships and subsidies for far too many large-scale undetakings. The Intel stake joins the Pentagon’s preferred equity in rare-earth miner MP Materials (making it the company’s largest shareholder), and the “golden share” arrangement that gives Washington a management role in Nippon Steel’s acquisition of U.S. Steel.
Subsidies from the America COMPETES Act and CHIPS Act arguably let Intel coast on legacy strengths. Now the U.S. government’s equity deepens the entanglement. If government money doesn’t buy progress, what does it do? At taxpayer expense, it derails entrepreneurship and innovation, distorts markets, fuels artificial booms, misallocates talent, blurs ownership status of discoveries, politicizes science, and adds regulatory layers while undermining risk management. Intel’s press release insists Washington will have only “passive ownership, with no Board representation or other governance or information rights.” But the federal state now has a financial stake in Intel’s success over rivals—including upstart innovators—who sit outside the glow of shared policy aims, financial support and preferential treatment. Strategic decisions about semiconductors—already warped by lobbying and subsidy—are now further separated from objectively valid resolutions. Whose interests will dominate when regulators write rules affecting Intel’s competitors or review new semiconductor mergers?
By undermining the American bedrocks of private property and competitive enterprise in so extraordinary a way, these new fusions of economy and state—of production and government—cast a long shadow over Trump’s deregulatory legacy. Observers like me can still tally and celebrate his one-in, ten-out rule and other administrative state rollbacks as the most significant of their kind, but the broader swamp agenda now threatens to eclipse them. In this setting it is striking to see the leaders of Microsoft, Dell, HP, and AWS line up in support of the Intel acquisition. Next could be an Amazon, a Tesla—or even NVIDIA. How much longer can the boundary between public and private withstand the pressure of Washington’s expanding portfolio?
Infuriatingly, a GOP leading this fusion of business and government fulfills the wildest dreams of the progressive left’s coercive utopians, who have long sought to control business and allocate resources. With the hundreds of billions dispensed by the Inflation Reduction Act and the IIJA, projects from local tap water to outer space commercialization are already public-private “partnerships.” That entanglement allowed Biden to traverse the country haranguing business on equity, climate, daycare, union labor, and other whole-of-government crusades—while taunting Republicans who relented for the sake of home-district dollars. Hardcore progressives have never accepted the legitimacy of cost-benefit analysis in the regulatory state, since in their worldview every incremental step toward centralized control is not a “cost” but a down payment on paradise. So there will be theatrical opposition, but count on progressives to embrace Trump’s executive overreach over business when it advances their aims, as Vermont Senator Bernie Sanders just did. Similarly, during COVID, the left remained largely quiet over “unconstitutional slop” like Trump’s unilateral extension of eviction moratoria. Over time, the more fusion between business and government, the less need there is to write new laws and regulations at all to advance economic and social engineering. That is not a state of affairs to which Trump should contribute.
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