The United States of America now owns 10% of Intel. Is that a good idea?
Lots of people are pretty dubious. Ben Thompson thinks it’s the right call.
Or, to be more precise, the influential tech analyst thinks not doing it would be disastrous.
Thompson’s argument, boiled down: Chips are crucial for AI and everything else; the US and everyone else are currently dependent on high-end chips manufactured by TSMC in Taiwan; TSMC and Taiwan are vulnerable to China, which means the US is vulnerable to China.
“At the end of the day it seems reckless for the US to place both its national security and its entire economy in the hands of foreign countries next door to China,” he writes. So even if there are lots of issues with the US owning a stake in Intel, and actively propping it up, he argues, it’s better than Intel not existing at all.
And maybe Thompson is right, and the deal Donald Trump announced Monday is a good piece of strategy.
So what happens when Trump repeats the same thing with other companies?
Because that seems quite likely. Trump officials like Commerce Secretary Howard Lutnick are already floating the idea of doing similar deals with American defense contractors like Lockheed Martin. That would make sense since the company is already “basically an arm of the US government,” Lutnick said Tuesday.
And again, maybe there’s a smart argument for similar deals in other crucial American industries. I’m happy to hear one.
But I don’t think that Donald Trump is particularly interested in strategic arguments for the equity stakes he wants to take in US companies. He seems most interested in doing it simply because he can.
That’s the argument he made on Monday, when he likened the Intel deal to a real estate transaction, where someone who wants an amendment to an existing agreement needs to pay up to get it.
“As a real estate person, if I have an agreement and I have any form of a stop gap where I can stop somebody from doing something — I have a covenant in an agreement and they come to me and they say I would like to do something but you have us restricted — if I do that, they usually have to pay,” he explained to reporters.
In this case, it’s important to remember, what Intel CEO Lip-Bu Tan wanted was for Trump to stop calling on him to resign. But maybe other CEOs will have different asks. Trump will be open to doing lots more deals, he said.
“I wanna try and get as much as I can,” he said.
Remember that just a few weeks ago, Trump made an unprecedented move to levy a 15% export tax on Nvidia and AMD for their chip sales to China. Now Trump is setting a new precedent. Instead of just tacking on a fee for companies that need his permission to do something, he’ll want to take a piece of the company itself.
Again: Maybe Trump will only do that in very limited cases, and this won’t be the new normal. But so far, our experience during Trump 2.0 is that new precedents get set very quickly. And that anyone who could challenge them — namely, the Republican-controlled Congress — isn’t interested in challenging them.
So if that means the Trump administration takes a 10% stake in a company you own, work for, or compete with, you shouldn’t be surprised.
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