According to the Wall Street Journal, Intel shares shot up more than seven per cent after word got out that the Trump administration is toying with the idea of buying a financial stake in the struggling chipmaker. The plan, still in its embryonic phase, would throw a lifeline to chief executive Lip-Bu Tan while letting Trump tick another box in his America-first manufacturing agenda.
Tan had a private sit-down with Trump at the White House on 11 August, according to sources, where the concept of state ownership was floated. The structure is still being hammered out, but insiders say it’s on the table. Bloomberg broke the story, which sent Chipzilla’s stock climbing even further after hours.
It’s an odd twist for a country that usually hyperventilates at the word “socialism,” but that’s exactly what it smells like.
The administration has been scrambling to beef up domestic semiconductor output, pushing companies to manufacture more on US soil. Chipzilla, despite its well-publicised floundering, is still seen as the only realistic homegrown shot at challenging Taiwan Semiconductor Manufacturing Co.
Former Commerce Department deputy chief of staff Jim Secreto said, “This administration knows how much leverage they have over the tech industry.”
It wouldn’t be the first time Trump has strong-armed the private sector. He recently forced Nvidia and AMD to pay 15 per cent of their Chinese sales back to the government for the privilege of keeping export licences. And in the Nippon Steel takeover of US Steel, Trump bagged himself a golden share to retain operational clout.
While it’s rare for the US government to buy into private companies that aren’t flat broke, it’s not completely without precedent. William Barr once suggested buying stakes in firms competing with Huawei during Trump’s first spin in the White House, though that plan died quietly.
Chipzilla might need the help. The company lost $2.9 billion in the second quarter and has shown little sign of reversing its collapse. Mira Ricardel, who served as undersecretary of commerce for industry and security, said, “Depending on how it’s structured, such a stake could give the U.S. government influence over and insights into Intel’s activities, especially when it comes to China, in a way that regulations or subsidies likely wouldn’t.”
In a statement, Intel said, “Intel is deeply committed to supporting President Trump’s efforts to strengthen US technology and manufacturing leadership,” while refusing to comment on speculation.
Tan’s position is shaky. Trump recently demanded his resignation, branding him “highly conflicted” over his investments in Chinese tech via venture capital fund Walden International and his old gig at Cadence Design Systems. That company, while under Tan’s leadership, flogged software to China’s National Defense University—banned under US export laws—and was recently fined $140 million (about €129 million).
Before Tan even got the top job in March, Senator Tom Cotton was already calling for his head. The board had just axed Pat [kicking] Gelsinger, whose plan to expand Intel’s manufacturing side was clearly not winning hearts or minds.
Intel was earmarked to receive $8 billion under the 2022 Chips and Science Act for a fab in Ohio, but that project is now delayed until after 2030. The company also plans to sack 15 per cent of its workforce this year. Ohio senator Bernie Moreno has called for an investigation into whether Intel misled lawmakers to bag the subsidy.
So now it’s up to the free-marketeers in Washington to explain why nationalising parts of the tech sector is suddenly the capitalist thing to do.