The US taking a 10% equity stake in Intel is a terrible idea and a dangerous turn in US industrial policy, but also the least bad option to make Foundry viable
The U.S. taking an equity stake in Intel is a terrible idea; it also happens to be the least bad idea to make Intel Foundry viable.
StratecheryBen Thompson
Context & Ripple Effects
Intel’s foundry transition has long been framed as a strategic challenge that may require public support: earlier coverage argued for a foundry spin-off paired with purchase guarantees, while noting that becoming a foundry was Intel’s largest business-model shift in decades.
The reported 10% U.S. stake moves support from subsidies toward ownership. Subsequent reporting says the arrangement is designed to discourage a sale of the foundry and includes a conditional option for additional shares if Intel’s ownership falls below 51%.
First-order effects
Intel receives a strategically aligned federal shareholder, while the U.S. gains a direct financial interest in keeping Intel Foundry under Intel’s control.
Foundry restructuring becomes less flexible: the reported ownership condition makes a sale or reduction of Intel’s majority stake materially more consequential.
Second-order effects
Potential foundry customers and private capital partners must assess Intel Foundry not only as a commercial supplier but as a business with a state shareholder and constraints on ownership changes.
The transaction invites scrutiny of the legal basis for converting CHIPS Act support into equity, after questions were raised about the program’s authority; that uncertainty can complicate the deal’s implementation and set a precedent for future support.
Third-order effects
If replicated, strategic support for critical manufacturing could shift from grants and incentives toward state equity positions, blending industrial policy with direct exposure to corporate outcomes.
That model could preserve assets policymakers consider strategic, but it also raises a durable governance question: whether state-backed incumbents can make capital-allocation and restructuring choices on ordinary market terms.
The trend: The Intel transaction is part of a shift toward strategic state equity, in which governments seek to secure critical technology capacity through ownership as well as subsidies.
Rather than take equity positions in private companies, perhaps the government could confiscate ~20% of pre-tax earnings. And then when it comes to control, Congress could pass laws governing corporate behavior.
.@benthompson on the 10% Intel stake: “The single most important reason for the U.S. to own part of Intel, however, is the implicit promise that Intel Foundry is not going anywhere. There simply isn't a credible way to make that promise without having skin in the game” [image]
Here's my take. If the government is the “lender of last resort” they should 100% take equity and arguably 100% of the equity. Failed to do this with GM, Goldman Sachs, United (& other airlines). How do you know if they are lender of last resort? The company takes the deal.
Maybe it goes without saying, but it is bad to have Trump obsessed with - and heavily invested (financially, emotionally, politically) in - Intel's stock price
Should the govt start taking equity in every start-up for the federal tax incentives we offer? Or Tesla? How about the banks? What about when a state govt offers a tax incentive? Should they get an equity stake in exchange? Board representation? This is a super slippery slope!
Trump & Hassett say the US government will take more Intel-esque equity stakes in private companies: https://www.cnbc.com/... KH: “So I'm sure that at some point there'll be more transactions, if not in this industry then other industries.” Run for the hills. [image]
The Intel deal isn't “smart” industrial policy. It's government ownership of private enterprise—at a discount, with strings attached, and with politics in the driver's seat. If the deal is repeated in other industries, expect less innovation, more waste, and slower growth. 👇 [ima…
I don't want the government making deals with private companies for any special treatment. I don't want the government to give money to specific sectors and companies Let them succeed or fail on their own However I really don't want companies to be FORCED to cede shares for
While Democrats twist into pretzels to avoid even the hint of “socialism” in their message, Donald Trump and the @GOP are drafting a list of private companies they'd like to partially nationalize. It really is the upside-down. https://www.cnbc.com/...
Intel breaking new organizational ground by formalizing the idea of a co-CEO that reports to a (third?) CEO to be named later. — www.intc.com/filings-repo...