What economic and policy experts think about the U.S. government’s stake in Intel

The Trump administration’s unusual step to make the U.S. government one of the largest shareholders in a major Silicon Valley company raises important questions about how that partnership will influence other businesses and affect markets, experts say.

In a rare move, the United States has invested in a private company that is not in immediate danger of failing or dramatically impacting the economy. On Aug. 22, President Donald Trump announced that the federal government had obtained a 10% stake in Intel, the computer chip designer and fabricator. The company’s press release said the government purchased 433.3 million primary shares of the stock at $20.47 per share, equaling 9.9%.

Though the government has purchased portions of U.S. companies before, in recent history it was typically in order to prevent a major corporation from becoming insolvent and potentially taking the nation’s economy down with it.

Unlike in the late aughts, when the government invested in the floundering auto industry, Intel was not in imminent danger of failing or tanking the economy, experts say. But computer chips such as the ones Intel designs and manufactures are becoming more and more critical to national security, as they’re used in a wide range of industries, including telecommunications, automotives and medicine.

The move has drawn both praise and criticism. Many in Trump’s own party, such as Sen. Thom Tillis, R-N.C., and Sen. Rand Paul, R-Ky., have opposed the move, while some left-leaning lawmakers like Sen. Bernie Sanders, I-Vt., have said they support it.

Economic and policy experts also disagree about the potential effects of the government owning a stake in Intel, with some seeing benefit in investing in a company vital to national security and others worrying it will encourage “pay for play” among some industries and deter others from getting involved in U.S. markets.

Why did the government buy a stake in Intel?

The U.S. government’s interest in Intel dates back to the pandemic, said Sujai Shivakumar, senior fellow at the Center for Strategic and International Studies. Chips were in high demand but short supply, and government officials believed it would be prudent to bring manufacturing of those parts back to the U.S. from Asia, where many companies had outsourced their design and fabrication.

In 2022, President Joe Biden signed the CHIPS and Science Act into law, which among other things, encouraged companies to make chips in the U.S. by setting aside $53 billion in incentives for manufacturing, research and development. Of that, $39 billion would be allocated as subsidies for building new facilities.

FILE PHOTO: President Joe Biden signs the CHIPS and Science Act of 2022 alongside Vice President Kamala Harris, House of Representatives Speaker Nancy Pelosi and Joshua Aviv, founder and CEO of SparkCharge, on the South Lawn of the White House in Washington, Aug. 9, 2022. Photo by Evelyn Hockstein/ Reuters

Last year, Biden awarded Intel $8.5 billion in grants and $11 billion in loans, plus tax credits, with the expectation that the company would build plants in Arizona, New Mexico, Ohio and Oregon.

Then, in August, Trump called for Intel’s beleaguered CEO Lip-Bu Tan to resign, alleging ties to China. Days later, after Tan met with Trump, the president called him a “success,” before announcing that the federal government had bought a stake in the company.

To Shivakumar, the Trump administration seems to believe the government “should get something in return for that grant, which is equity.”

Has the government bought equity in companies before?

In the early years of the country, the federal government owned a minority stake in the federally chartered First and Second Banks of the United States, Peter Harrell of the Carnegie Endowment for International Peace writes at Lawfare. In 1903, the federal government purchased a railroad company to build the Panama Canal, and during the Great Depression, the congressionally established Reconstruction Finance Corporation owned stakes in about half the nation’s banks. Since the 1950s, however, the government has taken a much more limited role in private companies.

During the Great Recession, first under President George W. Bush and then under President Barack Obama, the government temporarily bought equity in troubled banks and car companies.

“It was a pretty bleak economic environment, and it wasn’t intended to be long-term. It was to rescue and get out. And that’s basically what happened,” said Tad DeHaven, policy analyst at the Cato Institute, a libertarian think tank.

Trump’s approach to business in his second term has been more involved. Trump approved the acquisition of U.S. Steel by Japanese-owned Nippon Steel in June, a deal he initially opposed. He allowed the deal in exchange for a “golden share” of the American company – a non-equity stake that allows the federal government to have substantial control over specific company decisions.

NVIDIA CEO Jensen Huang and President Donald Trump shake hands at an ‘Investing in America’ event in Washington, D.C., April 30, 2025. Photo by Leah Millis/ Reuters

Weeks before Trump revealed the Intel deal, he announced that Nvidia and AMD, two other chip makers, had agreed to pay the U.S. 15% from the sales of their chips to China.

READ MORE: Nvidia to invest $5 billion in Intel; companies will work together on AI infrastructure and PCs

And Trump has floated the idea of buying equity in more companies, such as defense contractor Lockheed Martin.

What are the potential benefits and drawbacks?

Intel has been stuck in a bit of a catch-22, Shivakumar said. The public had lost faith in the company’s viability and capacity to produce chips, he said. Without that confidence – and the orders generated – Intel would start to lose capital and the ability to produce chips. Without that production, people would continue to lose faith.

Intel is also part of a larger interconnected system of supply chains, research and manufacturing, Shivakumar said, “which is underpinning not just Intel, but the whole industry.”

The government’s investment helps dig Intel out of that catch-22, Shivakumar said, a move that he believes is vital for national and economic security.

“In a sense, that part of the story is welcome,” Shivakumar said. “The more worrying part about it is, where is the current administration going with its interpretation of … what strings are attached to this equity position argument that they’re making? We don’t know. So that’s a big question.”

Details on the deal, especially long-term specifics, are sparse, Harrell told PBS News Hour’s Amna Nawaz last month.

“Is the government really going to be the right shareholder to help these companies succeed? Is the government going to start showing favoritism to these companies over companies that it doesn’t own? What are the kind of political requirements that are going to be put on companies that the government is taking an ownership in?” Harrell said.

DeHaven also raised concerns about how long the stake will last and politicization of private industry.

READ MORE: Trump says Intel’s CEO must resign, sending its stock tumbling

“Just based on how this thing came about, with the president calling for the CEO to be fired, and then he has to tuck tail and come to the White House and bend the knee, and then Trump gets his 10% – it’s already a politicized environment,” DeHaven said.

There’s precedent for that concern. In the 1930s, the federal government’s Reconstruction Finance Corporation bought preferred stock from banks to stabilize the financial industry. In some cases, the RFC used its status as a shareholder to vote to change management or reduce bankers’ salaries.

But there’s also a long history of public-private partnership in the growth of important technologies, Shivakumar said.

“If that partnership doesn’t achieve the right balance, it can also distort markets,” he said. “If the government is weighing in with the partial ownership of some companies and not others, does the support of some companies then disadvantage the others?”

It remains unclear what the legal argument in support of the move is, where the money will go and how it will be spent.

“There are a whole bunch of questions about just the viability of that arrangement going forward. Because there’s so many unanswered questions — markets hate uncertainty,” Shivakumar said.