Donald Trump is getting the US government into the computer chip business.
He announced on Friday that the federal government is acquiring a 10% stake in Intel, the Fortune 500 company that is one of the largest American manufacturers of semiconductors. And he hinted that the US might not be done adding to its stock portfolio.
“I will make deals like that for our country all day long,” he wrote on his social media website, Truth Social. “I will also help those companies that make such lucrative deals with the United States.”
Trump’s post was pushing back against criticism that has continued for days. He took aim at what he said were “stupid people” – a group that includes some on the political right.
“You can’t just be against socialism when the left does it,” said conservative radio host Erick Erickson. “So if you support socialism, apparently Donald Trump is your guy.”
Trump’s move is generating criticism such as this because it breaks with American tradition and small-government conservative orthodoxy. And some economists warn that his promise to help companies that make deals with the US government raises the potential for corruption and market inefficiencies.
“You’re looking at investment decisions now having to be made on the basis of politics, not economics,” said Tad DeHaven, an economic policy analyst with the Cato Institute, a libertarian think tank. “This is injecting the government directly into the lifeblood of a major corporation’s decision making.”
While Trump says the US paid “zero” for the roughly $9bn in non-voting Intel shares, the transaction was far from a gift. The US converted unpaid construction grants designated in the 2023 Chips Act – legislation intended to promote domestic semiconductor manufacturing – into Intel stock.
Trump’s actions are not entirely without precedent. During the 2009 financial crisis, the US acquired partial ownership of General Motors, Citigroup and AIG to prevent those companies from collapse. Those interventions were justified by Presidents George W Bush and Barack Obama as emergency actions taken on a temporary basis to prevent a nationwide economic meltdown.
While the Trump administration explains the Intel move as one taken to protect an industry that is vital to national security – as with the president’s decision to impose tariffs, deploy the National Guard to US cities and replace theoretically independent public officials – the legality of the move rests on his assurances with little outside oversight.
“This is not really about making Intel stronger, it’s about having control over it and maybe making more money,” said Robert Atkinson, president of the Information Technology and Innovation Foundation.
If state equity in private companies is an unusual move for the US government, it’s not exactly uncommon elsewhere. China and Russia invest heavily in their domestic companies. Even European democracies have a history of supporting what they deem as key industries, such as aerospace, communications and energy.
On Tuesday, Commerce Secretary Howard Lutnick outlined a similar strategy, saying the US is considering taking equity stakes in defence and munitions contractors.
“Lockheed Martin makes 97 percent of their revenue from the federal government,” he said. “If we are adding fundamental value to your business, I think it’s fair for Donald Trump to think about the American people.”
Another Trump economic adviser, Kevin Hassett, suggested a larger plan – that these kind of government interventions are the first step toward creating a US sovereign wealth fund.
The president has frequently admired the investment funds directed by other nations, such as China and monarchies in the Gulf, as an effective means of generating government revenue.
While he has not pushed Congress to formally authorise the creation of a US fund, the Intel investment model might provide an alternate route without the oversight and regulation that could accompany congressional action.
“I’m sure that at some point there will be more transactions, if not in this industry in other industries,” Hassett said.
The government’s “golden share” of US Steel that was negotiated as part of the Japanese purchase of the company, the cut of profits from advanced microchip sales by Nvidia and AMD to China, and the promise of foreign investment in US industries could provide further assets for such a fund.
“South Korea will give to the United States $350bn for investments owned and controlled by the United States and selected by myself, as president,” Trump posted on Truth social last month.
While Trump often touts his dealmaking abilities and his financial knowledge, Richard Stern of the conservative Heritage Foundation said that state control seldom matches the performance of free market capitalism.
“Even if he was the most genius businessman that’s ever lived, the truth is that part of what makes business so successful is that people involved in it are specialised. They know that business, that product, that field,” said Stern. “No human being can be universally perfect at running every business in every industry on the planet.”
So far, few Republican politicians – including those in Congress, which could assert oversight authority – have spoken out against the president’s new interest in state-managed capitalism.
Senator Rand Paul of Kentucky, an occasional Trump critic, is one notable exception.
“If socialism is government owning the means of production,” he wrote on X, “wouldn’t the government owning part of Intel be a step toward socialism?”
As if to drive that point home, Vermont Senator Bernie Sanders – a self-declared socialist – offered words of support for Trump’s move.
“If microchip companies make a profit from the generous grants they receive from the federal government,” the former presidential candidate said in a statement, “the taxpayers of America have a right to a reasonable return on their investment.”
The prospect that the economic power Trump is accruing with these latest moves could be wielded by a future Democratic president is another reason some conservatives are uncomfortable.
“Does anybody think they’re going to sit idly by while the government has a 10% stake in Intel and not have something to say there about Intel’s policies on green tech, on diversity, on corporate responsibility, go on down the list?” DeHaven said.
That hasn’t seemed to deter Trump, whose efforts may be part of a larger strategy or simply the eagerness of a businessman to step in where he can – whether it’s directing government investment, suggesting Coca-Cola change its soft drink formula or recommending that Cracker Barrel revert to its old logo.
“Everybody’s rushing out the -isms – corporatism, socialism, state capitalism,” DeHaven said. “At the end of the day, it’s Trumpism.”
