After U.S. Takes Stake in Intel, Trump Pledges 'Many More' Deals
By: Tony Romm and Ana Swanson (The New York Times)
The chief business of the American people is business.
S E E D E D C O N T E N T
Three days after the United States agreed to acquire a stake in the chipmaker Intel, President Trump signaled on Monday that he would pursue similar investments in other major companies, describing his new economic strategy as an attempt to "get as much as I can."
Mr. Trump's pledge underscored a significant and potentially risky shift in the relationship between government and private enterprise. With a particular focus on powerful computer chips, the White House expressed new fervor for nationalizing certain industries and technologies, in ways that conservatives once may have found unfathomable.
The president's strategy came into fuller view on Friday, after the administration announced that it would take a 10 percent stake in Intel, a beleaguered technology giant once viewed as the beating heart of Silicon Valley.
The acquisition of Intel's stock is the most notable intervention in private business since the aftermath of the 2008 financial crisis, when the U.S. government stepped in to rescue Chrysler and General Motors from collapse. But it also fits an emerging pattern under Mr. Trump, who has recently tried to extract favorable concessions when corporate leaders have needed his help.
To take over U.S. Steel, the Japanese-based Nippon Steel agreed to grant the U.S. government a "golden share" in the combined company to influence its direction. Mr. Trump also extracted a pledge from chipmakers, including Nvidia, to give the government 15 percent of their revenue from selling powerful computer chips to China, an idea that lawyers in the Commerce Department are trying to figure out how to legally carry out.
On Monday, Mr. Trump said he had proposed to Intel's chief executive, Lip-Bu Tan, that the U.S. government take a 10 percent stake. But Mr. Tan was also facing political pressure in the United States, where the president at one point attacked him and claimed he had ties to the Chinese government.
“People come in and they need something,” Mr. Trump explained, saying of the Intel deal specifically: “I hope I’m going to have many more cases like it.”
To some conservative economists, Mr. Trump’s declaration appeared both curious and problematic. For a generation, Republicans preached the idea that government should not interfere in free markets and bet taxpayer money on winners and losers — and yet the president himself appeared to acknowledge his tactics on Monday as a new form of industrial policy.
“I think what we’re seeing is less a strategic, thoughtful shift toward state capitalism and more an opportunistic display of corporate shakedowns,” said Michael R. Strain, an economist with the conservative-leaning American Enterprise Institute. “Either way, this does create significant risks for the companies that are entering into these deals, and for the long-term prosperity of the American people.”
One risk, Mr. Strain said, is tax dollars if the government is “reluctant to exit” arrangements with companies that are not performing well. Beyond that, he said, Intel and its peers may base business decisions “on political considerations.”
The White House has pushed back on assertions that it is unduly intervening in the private market. A White House official said the Trump administration saw the move as warranted, given the importance of semiconductors to the economy and Intel’s unique position in the market.
But critics have raised questions about the president’s plans. Under the deal announced last week, the government is set to give Intel $8.9 billion — the remainder of the amount that was earmarked for the U.S. chipmaker as part of the bipartisan CHIPS Act, which President Joseph R. Biden Jr. signed into law.
The Biden administration had conditioned the rest of that cash on a series of milestones to try to ensure that Intel produced chips domestically in return for taxpayer money. But the Trump administration has done away with those protections, dispensing the funds immediately in return for the equity stake.
That could be a risky move, given Intel’s history of technology troubles. Administration officials have implied that they could use their equity stake to help the company, for example by potentially leaning on other technology firms to become Intel customers and help power the business. But if Intel cannot produce the chips customers want, the government may have limited power to help it.
Mike Schmidt, the former head of the Biden administration’s CHIPS Program Office, said giving equity to the government would come at a cost for Intel, making it less cost-competitive while raising “a bunch of questions about government intervention in the economy.”
“How is this going to help Intel succeed?” he asked.
The deal has also stoked alarm among Intel’s competitors, which are wondering if they will be next. The Trump administration is already pressing companies to make more U.S. investments to receive the CHIPS Act funds that were promised to them under Mr. Biden, pausing the disbursement of grants as it reviewed the program.
The Taiwan Semiconductor Manufacturing Company and Micron have announced plans in recent months to increase their U.S. investments, though critics say some of those plans were already in the works or may never materialize. But Intel, which was struggling to complete its U.S. investments, was not in a position to make new promises.
Kevin Hassett, the director of the White House National Economic Council, described Intel as a “very special case” on CNBC on Monday. He said Mr. Trump’s aides, including Commerce Secretary Howard Lutnick, had “talked to Intel about the progress they’re making and the hurdles that they had to hop over in order to get the money, and I don’t think they’re particularly happy with that progress.”
But he also repeatedly suggested that the White House could seek similar investment in other tech companies, particularly in chips and artificial intelligence, likening it to a “sovereign wealth fund,” an idea that Mr. Trump has raised in the past.
“In the past, the federal government has been giving money away lickety-split to companies, and the taxpayers have received nothing in return,” Mr. Hassett said.
The question now is whether companies that can’t afford to announce big investments in U.S. factories or find other ways to please the president will be pressured to turn over an equity stake or make other concessions to the Trump administration. Chip companies are waiting to see how the government puts its plans into practice, industry executives said.
The Trump administration also sent a letter Monday saying it will abruptly void payments to a nonprofit set up to administer a semiconductor research-and-development program that was created as part of the CHIPS Act, calling the organization — Natcast — “an unaccountable, outside entity.” The program will now be run through the Commerce Department.
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Bill Clinton's policies to privatize government have been turned on their head. There must be a chill at the Cato Institute.
Oh, BTW, Obama really did set the precedent with the GM bailout.
Bill Clinton is no longer in office!
(But you probably already knew that, eh?)
That's irrelevant.
Legacy?? Bill Clinton don't need no stinkin' legacy.
So did Democrats give Biden the Clinton treatment - or - have Democrats given Clinton the Biden treatment? Asking for a friend ...
Trump is starting to sound more and more like a Socialist!
(Just wondering-- how much more government ownership of parts of American businesses will he indulge in...?)
Trump has set another President precedent! Trump is history's first Socialist Fascist.
As much as he wants until Jan. 20, 2029. I wonder who will be the first to run to the courts to stop this?
This is bad and needs to stop.
Well hold on now. This country is in terrible straights over the debt. That is a national security issue IMO.
The CBO recently said that the tariffs could, if left in place and no real changes to the world economy, bring in approximately $4 Trillion over ten years. Maybe lets take that money and any "profit" from this partial ownership and pay down that debt. Once the debt is paid off then ownership of the companies can be given back.
Given our current political layout I don't see how Congress is going to pay the debt down. This may get us out of that mess. Just a thought to ponder.
The national debt will never be paid down. The realistic goal is to try and keep it from growing too much more.
The "tariff" income will most likely be temporary. If business suffers because of the higher prices the tariffs will cause there will be a lot of pressure to end them.
Probably not, I wish it would be as I believe it's a national security issue.
Problem is I just can't see that happening with the politicians we have in power. And as long as the two parties are in control, the type of politicians we have won't change.
I believe that's why the CBO qualified their statement by saying if left in place and no real changes in the world economy. IMO unless the next president is Vance, I would expect the tariffs to be brought down if not just eliminated. Vance would probably keep them but I don't know that anybody else would.