Uncle Sam Shouldn’t Own Intel Stock
The Chips Act wasn’t about raising revenue, and an equity share wouldn’t enhance national security.
By Mike Schmidt and Todd Fisher
Photo: i-hwa cheng/Agence France-Presse/Getty ImagesThe Trump administration and Intel announced Friday that the government will exchange Intel’s Chips Act grants for equity in the company.
We ran the Commerce Department’s Chips program and spent hundreds of hours with Intel and its customers.
This approach is a mistake.
The bipartisan 2022 Chips and Science Act was designed to reverse decades of disinvestment in domestic semiconductor manufacturing.
The U.S. relies almost entirely on Taiwan for the advanced chips that power artificial-intelligence, communications and national-security systems.
That dependence creates unacceptable risk.
The Chips Act’s grants, loans and tax credits are intended to close the cost gap with semiconductor manufacturing in Asia and foster investment in the U.S.
The taxpayer’s return on these investments comes not in the form of revenue for the government but enhanced national security and supply-chain resilience.
That return is being realized to an extraordinary extent.
We have seen more U.S. investment in electronics manufacturing since Chips was authorized than in the prior 30 years combined.
More than $500 billion in investment has been announced.
All five global companies capable of leading-edge logic and memory manufacturing are expanding on our shores.
No other country can say the same.
Some background on Intel: The company’s products business, which designs chips for computers and servers, is large and profitable but not a national-security priority.
That business underpins most of Intel’s roughly $100 billion market capitalization.
What matters to national security is Intel’s foundry, the manufacturing arm that could, in theory, produce chips for other companies as well as Intel’s internal products.
That foundry is struggling.
It lost more than $13 billion last year and has almost no external customers.
Making Intel’s foundry competitive and profitable on U.S. shores should be a national priority.
A government equity stake doesn’t solve that problem.
Intel has no trouble raising capital in public markets—its recent $2 billion equity injection from SoftBank proves that—and there is no need for taxpayer dollars to replace what private capital is already willing to provide.
Unlike grants, equity comes at a steep cost to Intel.
Transferring grants into equity therefore risks putting Intel at a cost disadvantage relative to other chip makers, which are manufacturing predominantly in low-cost Asian countries and receiving direct incentives in the U.S. and around the world.
There are also practical risks.
Suppose Intel announces layoffs in an election year.
Will Washington look as if it is profiting from job cuts?
When policymakers set semiconductor strategy, will they be doing so as national stewards or as corporate shareholders?
And will South Korea’s Samsung and Taiwan’s TSMC—now both essential partners in U.S. manufacturing—see a level playing field if Intel is a government-owned competitor?
Where does this new model of state capitalism stop?
Taking equity doesn’t address Intel’s real issue, which is customers.
Intel’s 18A process has failed to secure any meaningful external customers, and Intel’s CEO recently acknowledged that, without external customers for its advanced advanced 14A process technology, the company can’t sustain its leading-edge manufacturing.
That would be a strategic failure for the U.S.
In our view, government does have an important role here: nudging, cajoling and creating incentives for major customers to diversify their supply chains and use Intel capacity.
Yes, this pushes against the market’s efficiency.
But a world in which almost the entire global AI economy runs on one supplier’s chips is a world vulnerable to disruption.
A semiconductor industry with multiple leading-edge suppliers is a healthier industry in the long term.
Taxpayer protections are important.
Chips grants already include upside-sharing provisions that return money to taxpayers if companies reap windfall profits.
And grants are tied to milestones—such as customer commitments, technology readiness, production goals and construction progress—that hold recipients accountable while protecting taxpayer interests.
These protections ensure that funds are advanced as key national-security goals are achieved.
The transaction with Intel appears to wipe out these milestones and instead provides cash up front, thereby neutralizing the government’s ability to safeguard the national interest.
The Chips program was the first American experiment in large-scale industrial policy in generations.
We certainly didn’t get everything right, and we welcome fresh ideas from the Trump administration—including its recent investments in rare-earth magnet production.
We aren’t even opposed in principle to taking equity.
One can imagine a scenario in which a strategically significant startup seeks capital and a government equity stake represents a risky but sensible long-term bet when private capital isn’t readily available.
But in a market economy, we shouldn’t undertake industrial policy simply because we want to make money for the government or because we relish the chance to intervene in the economy.
We should undertake industrial policy because, given today’s geopolitical competition with China, doing so is in our national-security interest.
All the potential tools of industrial policy—grants, tax credits, loans, equity, tariffs, demand-side incentives and more—have downsides, whether in financial costs to the government or in the risk of market distortions.
Effective industrial policy tailors these tools to the problem it is trying to solve, maximizing strategic benefits while minimizing drawbacks.
Turning Intel’s grants into equity would weaken U.S. competitiveness and introduce unnecessary and novel policy risks related to government ownership in the economy.
Equity in Intel isn’t resilience—it is the wrong tool for the job.
Mr. Schmidt, a distinguished visitor at Princeton University, served as founding director of the Commerce Department’s Chips Program Office, 2022-25. Mr. Fisher served as the office’s chief investment officer, 2023-25.
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