In general I would rather the government take a stake in corporations they're bailing out. I think the "too big to fail" bailouts in the past should have come with more of a cost for the business, so on one hand I'm glad this is finally happening.
On the other hand, I wish it were a more formalized process rather than this politicized "our president made a deal to save america!" / "Intel is back and the government is investing BUY INTEL SHARES" media event. These things should follow a strict set of rules and processes so investors and companies know what to expect. These kind of deals should be boring, not a media event.
I’d really rather we didn’t bail out these companies at all. It clearly creates moral hazard and makes it hard for better run companies to enter markets.
If shareholders are losing ownership it's less a pure bailout and more a strategic investment and/or takeover. It also potentially lets the average taxpayer benefit rather than just those its directly propping up.
Well as much as you don't like it, companies this big failing is terrible for the economy and in this case, national security to a degree. I'm of the thinking that when your company gets to a certain size we'd be well off nationalizing. Apple has more money than some nation states. Something that huge has the potential to affect global politics. There's lots of other reasons too, but this isn't like letting the corner store fail. The repercussions are huge. If we're going to bail out, the people should own some of it.
Chip manufacturing is too important for the US. We can’t be completely dependent on Taiwan. Nothing against Taiwan, it’s one attack away from being obliterated by China.
No company is going to come out of someone’s garage and build a chip fab.
Nvidia has a market cap of 4.5 trillion dollars and everyone is committing hundreds of billions to AI CapEx in their direction - they can afford to organise chip fabs if it really came to it. Ok TSMC and ASML would need to be on board but it could be done. Should be done in fact because even a simple SWOT analysis would show the risk to their business.
If Taiwan becomes practically inaccessible, is there any way another country can setup a competing fab (for the latest generation of chip sizes) without years of R&D? As far as I understand, the practical knowledge of how to do it doesn't exist right now. (Neither does the prerequisite tooling)
And it’s still owned by a foreign country and Taiwan is restricting TSMC from manufacturing their most advanced processors from being manufactured in the US.
There is no amount of scrappy cleverness that gets you from zero to manufacturing cutting-edge chips without shitloads of capital investment, years/decades of R&D, a huge manufacturing workforce, and big contracts.
There's no such thing as starting small and scaling in that business.
I think one of the people who got closest to that was Sam Zeloof.
He kind of had everything going: extremely clever and motivated, cooperation with his parents (who also worked in the industry), access to equipment. Kind of hard to improve on that.
He was able to replicate most of Intel's SOTA process... from 50 years ago. That's more than almost everyone else has managed in their garage but that's about the best you can expect without insane capex and ramp up (and again, it's not like he didn't have access to capital, it just wasn't monetary.) Even still it took five or so years to work everything out.
The SOTA today is really kind of insane. It's right at the frontier of what all of humanity is capable of. Of course as time goes on we'll push that out and today's SOTA is tomorrow's commodity but that won't change everyone's concern with being unable to replicate the contemporary best process.
The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
Why is this so hard for people to understand? Intel for years had a massive lead in the market. Instead of investing in the business the clevel suite instead opted for idiotic stock buybacks.
The only good news is that C-level suite can continue to do the same shit over and over again.
The government took 79.9% of AIG in that bailout - which was the biggest of the "too big to fail" bailouts from the past. People seem to forget that the owners of these companies that were bailed out got almost completely wiped out and instead focus on management compensation (which famously stayed high).
If a company has truly become too big to fail that it makes sense for the federal government to bail them out, then why are we even leaving the welfare of the company up to private industry in the first place? It's just asking for ways to siphon taxpayer money out of the government through their willingness to buy shares. It inflates the stock price because it shows that the government might buy more share in the future at market rate. Its operations should be required to be more transparency, since if they're large enough that their failure would dramatically impact the welfare of the whole country, their operations should be subject to more direct democratic will (at least, more direct than the many steps removed from what is happening to Intel).
Intel is public and their financials have indicated this would happen. Even at my most irrationally exuberant their stock buybacks didn’t make much sense.
I’m not sure what “more transparency would look like to you, but publicly traded companies with audited financials are quite transparent. As for the part about siphoning money, history has shown that taxpayers do well. In 2008, the US government took roughly 80% of AIG, sold off their stock by 2012, made a roughly $15 billion profit and AIG is no longer considered too big to fail. It worked and did what it was intended to do. There are reasons to be positive about this.
It's not otherwise related to all this but a real bug bear of mine is that municipalities don't get part ownership - along with controlling rights for matters like sales or relocations - of sports teams when we subsidize their stadiums through taxes.
I think it's a good choice for Intel as they are one of the very few who own fabs and fabs are extremely valuable pieces of equipment. Just because of 3 consecutive annual CPU "bugs" in essence, they should not shut down forever. Try try again.
The government should avoid bailing out big, uncompetitive corporations. If the government is acting as lender-of-last-resort in some crisis, then it should demand senior debt to that it gets paid back before any shareholder.
They're converting a grant, so Intel is worse off due to this move.
The only real benefit I can see is it looks more revenue neutral because the government getting something of value and Trump is unpopular for spending so much money on unfunded tax cuts.
I think I agree overall, but "these kind of deals should be boring, not a media event" make me doubt that position, because "deal becomes a media event" seems so eventually-inevitable given how democracy works.
I think punishing interest rates are better than an equity stake. As Intel's rally shows, having the government as your equity holder is actually amazing for investors.
Government is starting to be to big to fail. Living in the Great Lakes region its just the reality of it, as the geopolitics of the region are outplayed by idiots in other parts of the state.
The government is not 'bailing' Intel out. Intel's CPU business is profitable. Their manufacturing is not. America gave intel grants to build better manufacturing to secure America's national security interests. Congress did not authorize any acquisition of Intel shares.
All the talk about this from a business / investment side leaves out the simple fact that this is not actually authorized by anyone with the power to actually do such a thing.
Essentially, the government, elected by the public, voted to offer grants to intel, and then intel shareholders woke up today to find their equity had been diluted.
"People" you are referring to want a level playing field. If the Chinese government is tilting the field, there aren't a lot of good options. You can either watch the Chinese subsidize draining most productive capacity from the rest of the world, erect trade barriers (my preference, but it would require cooperation with other countries, which... ain't gonna happen for a while now), or try to tilt back.
Tesla was saved by a $500 million bailout loan from the DEO loan office. Part of the agreement was that the US government would take a stake in Tesla UNLESS they pay back the loan ahead of schedule. That's why Tesla paid it back ahead of schedule, Elon didn't want the government to take a stake. But he spun it as a victory for the US tax payer.
I agree. In fact, I think the government should own all utilities like they do in more socialist countries. It gets rid of price gouging, and the stabilizes the market in things that are necessary for human life.
The natural resources of the country should belong to all of us. Not just a select few.
Bailouts aren't following some rules of fairness, they're for specific reasons like preventing greater economic problems (2008) or national security (probably Intel). You might disagree that those are the best ways to address those risks but that's why we elect the government to make those decisions and act on them instead of letting the country collapse - which is arguably more important than social services which won't really matter if there's no money to fund them or the country has been taken over by some hostile enemy.
Is like the country is not already collapsing due to lack of social services compared to the supposed enemy which already has higher lifespan while having 10x lower gdp per capita.
> Bailouts aren't following some rules of fairness
And people wonder why populism came back. Huge transfers of wealth aren't about 'fairness', its about preventing greater economic problems that the people who received the bailout say will happen if they don't get bailed out.
At the end of the day, this line of thought is going to fuck over the country far more than any depression would.
One big difference is management control. People feel that government administered services tend to have poor management and citizen services more often than not. One big example is the DMV since almost every has experience dealing with it, long queue times are almost universal because no one gives a crap and it's very hard to fire a government employee. Or the passport issuance, or applying for permits. Or unemployment benefits, the list goes on and on.
Imagine if the DMV and passport services had even the possibility of competition like a private company has. You bet all of a sudden the service would get much faster and better and with fewer mistakes and red tape with the same or fewer number of employees. Or someone would set up a competitor and imagine how many people would even pay extra just to not waste several hours of their time.
It's tax payer money so there is a lot more waste than even at big private companies. For example, the costs to just administer and operate the social security administration(not including any money paid out to recipients) is $15 billion dollars with a big B. There is no incentive for anyone to save the tax payer any money and there would be a huge pushback from govt contractors, unions and employeees. See how much hate DOGE gets for even proposing cuts or higher efficiencies.
Any large IT project in the government in almost any country and at any goverment costs huge amounts while not returning much value if any. Look at the state and costs of local metro stations and trains in almost any city.
That's interesting example to choose, as I've actually heard often that the Social Security administration is an example of an efficient government administration.
Well, my local DMV is much more efficient and friendly than the private health insurance company I have to deal with.
But part of that is lack of competition. I can't really switch to a different insurance company, because the one I am with is heavily subsidized by my employer.
And BTW, I agree that Social Security overhead is unacceptable. It should be privatized and increased to at least $500 billion to be comparable with health insurance companies.
It's not acceptable at all to make private companies look bad.
It's the only chip manufacturer "left" in the US. The argument is national security: the US expects China to invade Taiwan and this will kill TSMC in the process.
Whether this will happen or not can be debated, but this is what the government expects.
GF hasn't gone past the 12nm node. TI is at 45nm. Micron is on relatively recent processes, but they make RAM, not logic (which are totally different processes). Intel is the only chip manufacturer left that is working in logic at anything like the leading edge.
GF is a few nodes behind. Micron doesn't make semiconductors, they mostly make flash and whatnot. TI doesn't have the capacity or knowledge to expand to Intel's size/capacity
re: Micron - Memory is very different from logic chips. You vast number of repeating cells in memory. If any of them are bad you can just turn them off and bin them as lower capacity. You can do that to some extend with logic chips but not nearly as much as memory.
> the US expects China to invade Taiwan and this will kill TSMC in the process.
Would it though? The TSMC foundries are pretty much in every continent. Are they just going to stop operating if this happens? Because that seems akin to killing a golden goose.
Also what is up with Global Foundries? I don’t hear a peep about them.
If (or when) China invades Taiwan we will be better off than Taiwan but I wouldn't call us "OK" at that point. That will be a major disruption.
It will take decades for the US to get where Taiwan is now in semiconductor manufacturing, if ever. It's not just about building the most advanced chip factory. It's about re-aligning the entire nation's value system and culture to allow such development to happen in the first place.
We complain about the money we spend already. And now we're supposed to subsidize an entire industry to the point where we can build the most complex machines known to civilization at scale in a time-frame that matters to a global conflict that's potentially approaching soon? I don't see it.
I see it different. The loser is the taxpayers. The loser is the market, which is less and less free. When there’s no incentive to run your company correctly… we get another company not run correctly.
This is my thought on it too. I don't think this is meant to be a political win so much as US intelligence views chip manufacturing extremely strategically. I also don't know about what will happen to TSMC. But the US has been pushing for US made GPUs as well. This goes back to Biden's admin as well.
I'm surprised to see on https://en.wikipedia.org/wiki/Microchip_Technology that Microchip does in fact have fabs. I thought it was fabless! Its fabs are in the US, but the assembly and test facilities are all across the Pacific.
As far as I know none of them manufacture anything resembling a replacement for a Xeon, which is relevant to national security because those are uses in military applications.
If the argument was for protecting Intel, then the US government should be placing huge orders with Intel for solutions that will fund R&D and allow the company to regain its position as a foundry. They should be tapping into the defense budget. DARPA should be involved. This was an opportunity for petty extortion and a step towards socialism.
Government involvement is the fastest way to corrupt the purpose of an organization, hollow out its soul and quickly get rid of all the competant people.
There's a reason that the DOGE findings made a laughing stock of government employees.
And now China knows the US expects this and it also knows the US does not expect to stop China, so China knows that it can expect the US to do very little. It's game theory turtles all the way down...
Edit: I think it's a misconception that China cares much about fabs in Taiwan. It wants unification.
The only charitable answer I could give is national security reasons for having domestic chip production, and even that could be accomplished in ways that don’t require the federal government having an ownership stake in Intel. For example, I don’t think the federal government has ownership stakes in Lockheed Martin and Northrop Grumman, despite those companies’ dependence on the military.
I don't expect a good reason given the history of this Administration, but a reason in my mind to save Intel is there's only 3 license holders for x86 CPUs. Intel, AMD (American), and VIA (Taiwanese). A dead Intel leaves a single American company that is able to make x86 processors, and a monopoly for actually good x86 CPUs. But somehow I suspect there's no logical reason for this besides lining the pockets of those in the Administration.
Why would the ISA matter to the government? I could see this being about Intel's physical manufacturing capabilities, but the ISA should be pretty irrelevant. Recompile what code you can, run the rest via qemu-user-static.
While there are other good reasons to save Intel, if it went under, someone could still buy the license. I can’t imagine why anyone would want a license to x86 in 2025. It’s not like all of the companies designing custom chips are going to be falling over themselves to design use the x86 ISA.
I haven't heard of them until this comment, but reading through Wikipedia, and a techpowerup article, I'm not seeing that they actually own a license to manufacture x86 cpus freely. It seems like they were able to due to it being a partnership with AMD. I could easily be wrong though.
From my vague understanding I thought that Hygon is able to build atop Zen 1 IP that AMD gave Hygon, although they can't get anything newer because of restrictions on doing business with China.
You are asking why save Intel of all chip manufacturers, and the answer is because there aren't any other major chip manufacturers in the US.
AMD no longer has a fab. TSMC dominates the global market and basically has no competition.
In the event that Taiwan is invaded, the US would suddenly have a huge problem getting access to any kind of high end chips, be they CPUs or GPUs. This would be a major problem economically and militarily for the US.
Some caveats: Due to the chip act, TSMC does now have fabs Arizona, though I'm not sure what their capacity is. TI, and some others building lower end components also have fabs I believe. For x86, high end ARM, and GPU's, virtually all of that is manufactured by TSMC right now, mostly in Taiwan.
This is a sure giveaway that the US military depends on Intel. It is the only major chip producer that has fabs in the US, and it is also the creator of the x86 architecture. That would mean that without Intel the military would become dependent on chips from Chinese Taiwan.
Not just the military, but the majority of consumer devices as well.
With Intel maintained, if China invades Taiwan and takes TSMC the US will still be able to make usable processors. They won't be the latest and greatest like TSMC, but they will be good enough. Maybe not the most powerful or efficient, but still rather close.
My only worry is this will mean management will start resting on their laurels and things will just continue to deteriorate. Or maybe the government can convince them to get rid of the bad management and start thinking more long term and less about immediate profits.
They are the only US company that can produce cutting edge chips now and realistically within the next 15+ years. It doesn’t matter that TSMC produces chips in the US. That is nice for the short term but doesn’t do much for the US in the long term if TSMC falls under China’s influence.
Intel is in the midst of a dramatic turnaround and huge shift in strategy. It might fail. But if they succeed it puts Intel and the US in a much stronger position in terms of technology and military leadership.
It mattered for China to have Apple/Foxconn/etc assemble phones in China. By this same logic, won’t TSMC have more tacit knowledge to offer America than Intel, even if their independence is short-lived?
Why would TSMC or Taiwan want to give that information to the United States? There is a strategic reason why TSMC does not build their latest nodes and processes in the United States and why their R&D happens in Taiwan. They want / need The United States to protect Taiwan and their interests. It opens up strategic options for the United States if Intel or another US based company can produce cutting edge chips in the ballpark of TSMC.
They supply components for the defense industry, where foreign production isn't a viable option. No one bank is more important than that. This is also why Micron is getting a free fab for strategic redundancy despite no clear reason why they would need 2x capacity after onshoring back to Boise.
Free market capitalism is great until you’re about to be the big Loser. And then the big dog steps in and yells for time out.
I think if this was a domestic thing it would be all kinds of dumb and wrong. But as a US National Security thing, it makes sense if you’re of the mind that significant intervention is fine when it’s in your country’s best interest.
The next phase is watching the U.S. government keep Intel on a palliative drip of softball contracts and tax dollars. I guess there’s a fair argument that this form of bail out could help Intel thrive again… or at least secure a domestic supply of chips for natsec reasons?
The US can't employ poverty-tier labor to enable competitive margins, though. American businesses and global trade partners already largely reject Intel's foundry services.
Labor is not the key factor driving chip prices or performance. Fabs are highly automated and filled with extremely precise machinery. The maintenance and upkeep of machinery, the yield per wafer, and consumer demand drive the prices. Labor is basically a rounding error.
Doesn't matter. All of the US's advanced weaponry systems now use "state of the art" electronic systems, which in the context of defense only means "not decades out of date." Two or three generations old is perfectly fine. The military does not need the latest and greatest CPUs and GPUs going into the iPhone 17 or whatever, but it does need the equivalent of the chip in the iPhone 12 or iPhone 8 or whatever for integration into next generation weapons systems.
But if all of our advanced weaponry used chips from Taiwan or Korea, for example, then the strategic implications for war in East Asia would be radically different. People are right to say that China could engage in war over Taiwan for chips, but for the wrong reasons. It's not that they want access to the fabs (they'd love it, but they're not stupid and they know the fabs and know-how would be destroyed in the war), but it would deny the US defense industry access to those fabs.
If US missiles or drones use chips from TSMC, and TSMC is in occupied territory or a war zone... the US can't make more missiles or drones. And no matter how powerful your starting position is, you can't wage war without the ability to replenish your stockpiles. It's the bitter lesson Germany learned in both world wars.
China wants hegemony in Asia, and to remove the influence of the US, Japan, and their allies within what they perceive as their exclusive sphere of influence. How to achieve that? Invade Taiwan, which eliminates western access to TSMC one way or another, effectively blockading western defense industry from the core things they need to resupply their militaries in a war. Like WW1 all over again, a "preemptive war" becomes the game-theoretic optimal outcome, and the world suffers.
How to counter that? The US and its allies need to make sure they have access to chip fabrication facilities that can produce near-state-of-the-art chips, even at inflated prices that are not commercially viable in peacetime, as well as the necessary strategic minerals like germanium and lithium. Only then does calculus swing the other way in favor of peace. Hence Biden's effort to get TSMC to build SOTA fabs in Arizona, and when that failed/stumbled, this investment in Intel.
The China narrative is pure nonsense. You always have guys like Gordon Chang pushing alternating stories about the coming collapse of China, followed by a scary hegemonic whatever.
Regardless of whether you believe the China narrative is true or not (that is to say, whether China will actually do this or not), it is driving US policy.
I don't care how nihilist or kafkaesque you want to take the conversation - the math won't check out. You can't sustain a third-sector economy on second-sector jobs while importing first-sector goods. The entire financial system in America won't survive that sort of transition, it would be the Great Leap Forward of the 21st century.
One of the things about the Great Leap Forward is that it happened. Just because a path of action will obviously lead to mass death and suffering while accomplishing nothing doesn't mean it won't be taken.
Yeah. Risky compared to Intel. Intel manufactures chips _right now_. They have lost their process edge, but if I have to put chips into a drone tomorrow, I'm betting on Intel rather than any bag of scrappy kids. The risk that they _can't_ produce chips is the same risk as that of Hillsboro Oregon getting carpet bombed -- which is of course not 0%.
Note that there are several drone microcontroller manufacturers based in the U.S. right now - ModalAI, ARK Electronics, Rotor Riot, etc.
The thing about drones is that they actually don't require much computational power compared to modern consumer computing. It's just math - control systems, calculus, trig, waypoints, etc. All of these were solved problems in the days of the Apollo Guidance computer, and will run comfortably on chips from 2 decades ago. The STM32F722 microcontroller that is one of the most common hobbyist drone chips is built on the 90nm process node, runs at 216MHz, has 512K of SRAM, and costs about $5/chip. FWIW, it's made in France and Italy rather than China, and STMicroelectronics owns its own fabs rather than outsourcing to TSMC or Chinese companies.
If you want to do things like computer vision on the drone, the computational requirements are quite a bit higher, but you can still run something like YOLO at orders of magnitude less computational power than what you've got in a Pixel 9 or iPhone 16.
...which makes me wonder if a better strategy for the military would be to fund a wide variety of domestic chip manufacturers operating at decades-old process nodes (eg. the 65nm process node from 2005 seems to be at about the sweet spot), rather than try to prop up the one American company that can compete on cutting edge 7nm process nodes. Particularly since the experience of WW2 was that simple, robust designs that could be easily licensed to other suppliers and mass produced (eg. the Hawker Hurricane, Grumman F6F Hellcat, Grumman/GM TBF Avenger, Liberty ship, escort carrier) were much more effective at turning the tide of battle than designs that were on the cutting edge of technology (eg. the Vought F4U Corsair, Gloster Meteor, Japanese Shinano aircraft carrier). The latter were often better in absolute performance, but arrived late, in small numbers, and with teething troubles that made the former carry the bulk of the battle. The Liberty Ship, for example, used reciprocating steam engines that were 50-year-old technology in WW2, but they were "good enough" and dead simple to make.
If you think getting a couple million dollars of funding and expecting to show profitability in a few years is hard, just wait till you try it with billions and 5+ years.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> Of the total, $5.7 billion of the government funds will come from grants under the CHIPS Act that had been awarded but not paid, and $3.2 billion will come from separate government awards under a program to make secure chips
Interesting accounting there. I guess the government was threatening to void the grants or something? Why would Intel donate shares for grants already approved?
I guess this nets out to a stock issuance with no downward price pressure, so still not a bad trade for Intel if they thought those grants were worth nothing.
Because this clears the way to sell Intel Foundry and separate the chip design from the chip-manufacturing businesses completely.
The CHiPs act money had claw-backs such that if Intel sold the Foundry off they had to pay the government all the money back. This new deal waives all the clawbacks and says instead the Government gets warrants, good for five years, for 5% of the company at $20/share, good once they control less than 51% of the Foundry.
Ergo, the reason for the deal is that the board wants to sell off the Foundry, and didn't want to pay back the CHiPS act money.
This feels like another signal that the U.S. as an economic superpower is transitioning into something else.
I guess this is kind of like an auto or bank bailout, but is there something to bail out, or are they just gaining ownership of a doomed (in the classical sense) corporation?
[Ex Post Facto Clause, US Constitution](https://www.congress.gov/crs-product/IF11293). Oops, I thought it was so obviously going to be done away with in the courts, but in 1912 the Supreme Court ruled that it applies only to criminal punishments.
No, the shares already existed, they were just held by Intel. According to their most recent 10-K, 10 billion shares of common stock are authorized, but only 4.33 billion were issued and outstanding.
The CHIPS grants had clawback provisions, which carry risk. This transaction removes that risk, so it's very good news for Intel.
> The existing claw-back and profit-sharing provisions associated with the government’s previously dispersed $2.2 billion grant to Intel under the CHIPS Act will be eliminated to create permanency of capital as the company advances its U.S. investment plans.
Because the government having a financial interest in Intel’s success is expected by the market to result in the government acting in Intel’s interest, in order to profit.
Sometimes, there are returns on investments beyond what an accountant would calculate, but the investment only costs the same. Making stock priced only for normal returns a buy for beneficiaries of said additional returns.
In this case, reducing the risk associated with the imported chip supply.
It's interesting that Trump's announcement of this includes a claim that the government has acquired this 10% stake without paying anything for it. Of course, that's probably just bluster to impress the more impressionable part of his base, but I imagine Intel's CFO isn't going to sleeping well for the next few years.
This is worse than I expected. They're apparently putting in no new money and retroactively demanding stock in exchange for grants that were already awarded. If Intel can't afford to build 14A and we're putting in no net new money... then Intel still can't afford 14A? Unless they were lying.
There werestrings attached to the CHIPs act money. Not saying this is some great deal. It isn't. It is a deal made from a place of necessity and weakness for Intel, but it gives them the cash infusion they need in the short term. Right now Intel's only goal is to have enough money to get 14a off the ground and attract at least one large external customer to prove their capabilities.
... what would a chip version of 641A even look like?
If it involves (a) identifying / filtering stuff they want to spy on (b) sending it back to one of the intelligence agencies, it seems like both would be hard to do well and secretly ... right?
Ironic, Western politicians thought opening up to trade with China would lead to it adopting a Western model of government. Instead it's lead to the USA adopting the Chinese one.
Yeah, this so weird coming from the US. The US government has a history of writing no-strings-attached blank cheques to people/companies just so avoid the stigma of government control in public companies.
I wonder how the markets will react, will stocks go up because people will assume Intel's going to be a government mandated champion or will they go down because of the negative connotations government control brings?
Kinda. But I think the current Chinese model is actually much closer to how the USA used to work when there was competition with the USSR. Closer than the US of today compared to the 70s and 80s.
The current Chinese model's basically you have fully publicly traded companies, companies who are either minority or majority owned by a certain provincial government and ones who are either minority or majority owned by the central government (although this is surprisingly rare outside of key areas like telco/banking)
"Air America was an American passenger and cargo airline established in 1946 and covertly owned and operated by the Central Intelligence Agency (CIA) from 1950 to 1976."
It somewhat makes sense in terms of industries which are deemed strategically important. Intel needs to start thinking long term instead of short term profits.
Intel has had a couple years of saying they were going into a more long term vision and failing, and it’s unclear how direct government ownership will make them get better at execution
if someone believes this, they should buy intel and just do it outright! But no one does because it's not as easy as "just think long term" - if it were, berkshire has the liquid money to buy intel several times over.
We aren't anywhere close to being in a depression though. What extraordinary situation requires the government to take a stake in a public company and under what conditions will this position be liquidated?
That's very cute quip but I notice that it places the blame on 'trade with China' for an alarming problem that is in fact entirely the doing of US voters expressing their values (or the lack of them) in fair elections.
A more interesting question is whether that voterbase's idea of what they were voting for does or doesn't line up with what they got.
The Chinese have been surprisingly willing to let companies and sectors die even at the expense of growth (see real estate), I think it's honestly too charitable to compare the US to China, which has at least some degree of technocratic governance, the US went straight for something out of the Tropico franchise
The promiscuous relation between government and tech is as old as Silicon Valley. I'm fact, it created Silicon Valley. It started when people in China were still building backyard furnaces.
It’s not “adopting” the Chinese model yet, so much as incoherently copying bits and pieces. If you want to run effective industrial policy you need sufficient state capacity and an army of technocrats who are experts on industrial policy. Trump’s second term performance gives no hope on both fronts.
Civil forfeiture existed since 1660s, and was used initially to confiscate smugglers' vessels. Then it was dug out during Prohibition, and turned toxic in 1980s when the agencies doing the forfeiture (e.g. police) were allowed to keep the confiscated property. Ideally it should be used for restitution (e.g. to victims of fraud), but...
I suspect you were growing up when this was in full swing already.
We also have criminal forfeiture, which was leveraged a lot more then. Civil forfeiture use expanded dramatically in recent decades due to profit sharing with DOJ alongside court challenges failing, suggesting the need for constitutional amendment if awareness of the practice improves.
We're living in the time of irony. Up is Down, Left is Right, Right is Left. Republicans have become Socialist. Free Speech absolutist now against Free Speech.
Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point.
Speaking of things that wouldn’t surprise me, if Intel can’t manage an about-face in the next three to six years I fully expect them to become a Nationalized enterprise if only to preserve fabrication and chip design capabilities domestically. Same with Boeing given their less-than-stellar track record of late.
The current conflict is over domestic manufacturing capabilities. That’s where it will continue to rage until and unless full-fledged war breaks out. It doesn’t matter how many chips are designed domestically if all production capacity is in Asia within China’s sphere of influence. Intel is a major outlier for chips, as is Boeing for aerospace.
> Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point
I'm not sure how this applies.
The US government just gained a 10% stake for nothing (that wasn't already given). Effectively going from the scenario you are painting to now taking a part of the profit as well.
I’m reminded that Chrysler took a big loan from the US government in 1979, $1.5 billion which today is equivalent to about $5.9 billion USD according to the inflation calculator I found.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars
I don't understand. Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
The answer is in the paragraph in between the two you quoted from. The money for the purchase has already been appropriated by Congress and awarded to Intel. The awards didn't previously have this giant string attached where Intel gives stock in return. But now they do.
And it makes sense that Intel is spinning it as a generous investment from the gov't, but the gov't is spinning it as a free gift from Intel. Neither account really paints the full picture, but each one paints themselves as coming out ahead.
Yes, but its semiconductor industry so its complicated.
Intel got money via grants from the chip act and via other governments. Part of the reason they got that money was to help them build the chip fans in the USA and funding research and workforce in other nations. The fact Intel has claimed its slowing construction basically is a full 180° spin and will set them back in manufacturing ability.
Previous CEO strategy was focused on heavy investment in catching up on manufacturing ability. But once you get stuck on a node it becomes expensive to catch up.
New CEO is clearly trying to shed weight. They have let go of a significant % of workforce, stopped certain projects all together, and seem to be basically selling off parts of their technology and assets to keep cashflow positive.
Given the current CEO and his history and connections, plus the US government involvement it looks like a rocky situation.
That's precisely how private citizen Trump ran his businesses as well. Make an agreement with contractors to get work started knowing full well those agreements were never going to be honored. Instead, refuse to pay anything forcing contractors to renegotiate at much worse terms vs not getting anything at all. The whole time banking on these contractors not willing to fight in court. That was the art of the deal
> Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
Extortion.
Recent Supreme Court decisions have permitted the government to unilaterally cancel disbursements, even in flagrant violation of the plain text of law, impervious to preliminary injunctions, and then put up procedural hurdles to significantly increase the cost of reaching a final judgment in favor of the plaintiff. See, e.g., the most recent decisions issued this week in National Institutes of Health v. American Public Health Assn.: https://www.supremecourt.gov/opinions/relatingtoorders/24
I had seen that, but I don't consider that "paying nothing". That's paying something. I'm also confused how it's a "grant" if it's completely transactional. That's not a string attached, that's just a purchase. So I guess it's just political spin on all sides.
Depends on who you ask. Trump himself seems to think the US is getting 10% for free. I think that's a fair assessment given that these grants were already supposed to be paid out to Intel, without any kind of equity stake promised.
Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant. Samsung, TSMC, Micron and others were granted similar funds without any kind of withholding or demands for equity from the federal government.
> Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant.
Sure, but Intel's new CEO is making a lot of noise that indicates that Intel is maybe not going to be able/willing to build some-to-many of the things the CHIPS money paid for.
Giving FedGov a 10% stake in the company [0] is better than taking the money back for nonperformance, wouldn't you say?
[0] Which -as I understand it- was the sort of thing that was done for those finance companies that were Too Big To Fail when all that fraud^W novel financial engineering eventually caught up to them.
Trump feels Biden gave intel billions for nothing. Trump feels he’s balanced the scales by getting 10% of Intel. Trump gets to spin it as getting 10% of Intel for nothing.
It's effectively a grant. The US government isn't buying existing shares. Intel is issuing new shares and selling them to the US government - so actual money is being transferred to Intel (and existing shares are being diluted as a result).
Socializing a corporate venture with peace time debt seems counter to the ideals of free market capitalism. Even the takeover of "government motors" (GM) during the Great Recession left many concerned about government overreach. Boeing killed people with a bad product, and they only faced a fine without direct equity takeover.
The clearer picture comes from Reuters[0], as usual:
>The government will purchase the 433.3 million shares with funding from the $5.7 billion in unpaid CHIPS Act grants and $3.2 billion awarded to Intel for the Secure Enclave program.
So the same playbook hes taken across the board: cast aspersions on leadership, withhold duly appropriated money in contravention to the law. Rinse repeat.
If you’re going to give taxpayer money to a for-profit company, taxpayers should receive a share of the company in return. I generally don’t like 90% of the policies we’ve got going on right now, but I actually feel okay about this one.
> taxpayers should receive a share of the company in return
This is seductive logic but I think the opposite is true. The only time government should be giving money to a for-profit company is where a dividend in value is available that is not related to having a stake in the company.
Think about it this way: if the value transferred is fully realised as shares in the company then the government actually transferred nothing to the company. It was a pure commercial transaction and there is no obligation on the company to do anything different than it would have done commercially otherwise. Except the outcome is that the government is now entangled in private industry which is generally bad because it creates strong conflicts of interest in terms of policy and regulatory powers wielded by the government. All the dividend to taxpayers comes from the part that is not realised commercially.
Doesn't this create an incentive for the US Gov't to boost Intel and harm their competitors? That seems not great to me from a competition & healthy markets standpoint.
In the rare conditions where this has been necessary in the past, US companies have been given clear terms for regaining control of those shares. I'm not seeing any buyback provisions.
This is ignoring the original agreement of profit-sharing with the government as was in Biden’s original plan. Feeling “okay” or not “okay” is irrelevant until we know how well Intel does in the next decade and calculate the cost against the profit sharing agreement.
Yeah, I haven’t dug into the numbers to know. Which option makes more money for the government (and therefore the taxpayer, sort of) - a profit sharing agreement, or a share of the company (which, as with all publicly traded companies, is a profit sharing agreement that sometimes happens through dividends, and sometimes happens through stock sales).
Who cares about the money recovery, the actual concern is about getting the production up and running. This doesn’t really address that in any capacity.
True. I’d probably prefer to see the money go to a better performing company, but since there are like, 2 companies in the US that actually make semiconductors, there isn’t much other than starting a whole new company. Which, for $10B isn’t possible in this industry. So if the money is going to go to Intel, I at least want a cut of it, is my point.
We already got a “cut of it”. This is just redefining the “cut” we get is my point. Either way though you probably won’t ever hear the results of the cut. To get value from this cut the government would have to sell shares worth much more than they are now. You said something about a better company?
Isn't it the opposite of a bailout, given that the US gov't is seizing an ownership stake retroactively based on past grants/bailouts but giving no new money at this time?
CHIPS act is a grant similar to a small business grant, not a bailout at all. It was intended to incentivize chip production in the United States and was available to any company manufacturing in the united states. It had no equity strings attached, as authorized by congress.
> The government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program. Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the U.S. Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.
So it kinda is something weird? It's not really a pure bail out, the Chips act already did that, and it's also not really a tax because they aren't going to get money out unless there's dividends. It's more like a power play which makes sense given that Trump is uncomfortable without anyone getting anything for nothing.
A government stake gives confidence in the company’s survival that a one-time cash dump for the CHIPS act couldn’t.
It’s not a lot different than what car and financial companies got in 2009. They were about to go under because no one thought they’d be around long enough to get out from under and deliver goods or pay their debts. The government stake enabled them to keep operating and eventually recover and then the government returned the stake to the market (or will soon w/ Fannie & Freddie).
I am surprised there is so much talk about China. Can we just focus on our own business here in the US: fixing the roads, bridges, schools, cities, etc.? Let’s make America greater first!
I finally grok the Republican party. It's only socialism if it helps the poor. Government handouts to corporations and trade protectionism? Mainly helps the rich, so it's not socialism. Tax money spent on a special interest program? Again, if it mainly helps the rich (or their party's base), no problemo. They're the Kleptocracy Party.
The stocks were not bought. Intel's board literally voted to give 1/10 of the company to the American government. Any sort of other take is propaganda. The claim that the shares were in exchange for grant money is false. Grant money is free and requires no payback. Congress authorized grants, not equity investments.
Looks like they will get common shares (not preferred). Could Intel create a new share class for this investment (with different voting rights)? Does 10% give the government a controlling interest?
For a party who talks constantly about freedom, this administration is sure doing a lot to encroach on said freedom, of both individuals and corporations.
I am expecting shareholders to be very upset. If, as Matt Levine likes to say, everything is securities fraud then this is going to court one way or another.
Did Lip Bu Tan initially try to say no to this? You'd kind of expect him to say no. Is that why Trump tried to oust him? Is Trump trying to oust him the reason Intel are now accepting this?
There was no guarantee Intel would get the rest of the CHIPS money they were granted - even the Biden administration kept holding it back (after officially awarding it to them) - as there were doubts Intel could deliver.
I also wonder if some deal was made around 14A. Tan said he would not develop it without commitments from customers, because sales from Intel CPUs wouldn't justify the cost. This may be a way to ease that pressure and give Intel another chance even without serious customer commitment.
The investment from Softbank is interesting because ARM is also a portfolio company of theirs. ARM has said they want to make their own chips now so Intel might be a good candidate for that.
No board seat or governance rights. What's the government getting out of this? Trump brags of a good deal? Might profit in the future? Or _actually_ although technically there's no governance, government might actually influence how Intel is run?
Besides politics and image, are there any benefits?
this is a step away from capitalism and it harms any startups destined to compete with Intel and discourages investment in the startup ecosystem that might compete with Intel, and punishes investors/customers in/of any of Intel's competitors.
Ahh, yes, conservatives please lecture me about the utopia of the free market and how those evil socialists that take control of the means of production just screw it all up.
Number 6934 on my list of "every accusation is just projection".
Didn’t the US invade Iran when they did this to their oil industry? (Yes I know 10% is different to 100%, but wow… I thought the US shun commandeering of private companies?)
Unless the descriptions of the deal I've seen are wrong, this seems random and pointless. No new money. A lot of the support for Intel foundry, and a lot of the people in that are gone now. So what's the national strategic interest in Intel? Pat Gelsinger must be happy he didn't stick around for this shitshow.
Starting today, under the government’s guidance, Intel shall serve the needs of the needs of the nation - not the whims of oligarchs.
Liberated from wasteful and destructive capitalistic competition, Intel’s revolutionary “people’s processors” (soon to be developed) will ensure that the world’s most advanced AI chips are made in America. And priced within the reach of every US worker.
The Republican party of 2008 bears little resemblance to the one of 2025, especially on economic issues. Many in the party have changed their views over the last decade+ on industrial policy and the libertarian wing of the party has very little influence now. It's really a striking shift.
What remains of the "old guard" is, in fact, loudly complaining about this move:
For me as a vague 1920s maybe-the-SocDems, I see this as vaguely positive. A return to pragmatism from market dogmatism.
I see some of the tariff stuff and the US protectionism sort of the same way, although I don't approve, since I think the US uniquely benefits from this kind of thing due to that the dollar is such a predominant reserve currency and since I think it's badly done and will backfire, tarring what in principle be sensible policies if carefully targeted with being Trumpist.
Exactly! I know there's a lot of Trumpers/MAGAs on HN, so I'm sincerely asking them: How is this not the evil thing you guys constantly lecture us about (socialism!)?
Because they only lecture about socialism as a red herring. They only care about power and obtaining it. Fascists have no actual principles other than more power and hatred of others.
I am a republican. I even voted for trump. I am categorically against this. In fact, he should be impeached for it, and I have already called my representative (a democrat) telling her she has my vote if she introduces articles of impeachment against him. This is a red line for me. My parents left a third world country to not have to deal with this shit.
For Nvidia this is already happening. They're taking a chunk of the profits of Nvidia operations in China. The Chinese have been prescient when stopped any Intel and Nvidia chips in government and strategic areas of China.
Survival is not the issue, it is about control. Today 10% Intel stake (non-voting, bought with already-promised CHIPS funds) puts the state on the cap table, and the 15% skim on Nvidia and AMD China sales swaps export licenses for tribute. The HN usual knee-jerk downvotes on anything about Trump admin criticism, just help normalize it.
> "The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars,” President Trump wrote"
This wasn't any sort of investment, it was blackmail. No corporation in the country would voluntarily give up 10% of the company to the federal government - for free - unless overtly threatened. The Trump administration is hoping that by exerting control over Intel, it can begin dictating conditions to Intel's customers, thus the tech community at large.
I also assume that one of Trump's cronies will take a spot on the board or some other oversight role, and in the near future, Intel will enrich Trump in one way or another, such as stock, investments, insider information, etc.
Nothing about this is good for the U.S. or Intel. It's not a bailout or a sign of support, but a way for Trump to have power over the tech sector.
> The Trump administration is hoping that by exerting control over Intel, it can begin dictating conditions to Intel's customers, thus the tech community at large.
This was my TDS-reaction as well. But, honestly, I feel like the "tech community" has moved on from Intel/x86 anyway. Or, at the very least, this move will accelerate that migration. ARM for the win!
And now we see Trump taking over the US economy! He will not stop there, of course. If Intel folded, other companies of "national interest" will follow suit and Trump will appoint his friends to each of them.
Arguably the alternative was the government just... not giving them the CHIPS Act money. (And there's certainly a point to be made that Trump altering the deal is... problematic.)
But I will say, I find the concept that when we invest public dollars in a private company, the public retains a stake appealing. I think about the strategic oil reserve, and how the government actually can make money by buying and selling oil to the open market. The idea that if we inject money into a company to help our domestic industries, that the government can sell it's stake back out at a later time is appealing.
(And again, to be clear, not a Republican or a Trumper here, and I assume in Trump fashion he will find some way to screw everyone involved and get paid himself personally... but the concept of the government acquiring a stake rather than just giving them a grant is on it's face... maybe not terrible?)
This is simply state ownership of what's seen as a strategic business. It's an abandonment of market dogmatism, but not a step towards any of the many ideologies or positions where markets have a smaller role.
Usually I suppose, when I think state capitalism I would think something like the Soviet Union, where this happens across many businesses with the state owning everything, but I suppose it is state capitalism, or a state capitalist element in a market system. One might even call it a mixed economy, or a sort of hacked-apart Swedish model without labour unions and state ownership of only certain strategic industries, rather than let's say, state ownership of hospitals.
I despite/abhor this administration and their politics, but this is a good move.
There should be more privatization where national interests are involved.
Instead of the ACA for example,the government could have taken a 51% stake in health insurers (forget subsidizing them, own them!) and we the voters would elect politicians to oversee health insurance instead of hoping and trusting CEOs.
So many problems are caused by companies chasing short-term shareholder satisfaction. If the government is a significant shareholder, then guess who they'll try to make happy?
The sheer threat of the government buying a controlling interest and running your company might make some companies behave in the interests of the public more. Especially, if the government is also engaging in policy to harm the company's revenue before buying stakes in it.
I'm not saying the US should be a full-on communist or socialist economy, nothing like that. This is capitalism. We the people get to use or tax dollars to our benefit. Think about it, the US sells bonds right? what if it paid for them by investing in company stocks and derivatives? that's revenue right?
The whole pearl-clutching over ideological extremes doesn't serve the public or the economy's interest.
Some privatization is good, none is great if everyone was decent and honorable. but in this society, moderate privatization where there is potential benefit to the public and national security makes sense.
Companies with government investment should also be prohibited from making political donations, so any company that is trying to sway elections faces the threat of the next administration buying stakes in them to prevent that behavior.
This could be the missing 5th estate that can make democracy last.
I agree. He should take control of Tesla, OpenAI, Palantir and Facebook next. Then privatize some of the leading quantum computing companies. Why do we even need venture capital if we can just build out an Office of Strategic Investment and control everything from the federal government. \s
Who do you expect to design and make chips for national security-level programs in the future wars when Taiwan is a deep crater?
Every serious nation state has an arch design house and a fab. It need not be cutting edge (most militry stuff is a few gens old), but it needs to exist. Russia has Elbrus. China has Looonsoon and SMIC. Europe has ARM but is a bit behind here fab-wise. However, STMicro does have fabs in europe.
This is just securing access and control of national-security level resources.
The thing is, even though the US is trying to create an alternative for itself, once Taiwan is in danger, this would for the EU mean a total US microchip monopoly, so radical action becomes necessary.
If I were a political leader in the EU I would consider nuclear weapons sharing with Taiwan if that happened.
The surprise is the federal government acting like an unfair negotiator, substantially altering the deal after it had already been struck. Equity in return for investment grants was never a part of CHIPS, and was only made part of it by Trump who seems to have originally wanted to kill the deal because it wasn't made by him.
Trying to ignore the politicking on this so it can be clear on what exactly is “happening”.
As far as I understand, all Trump did was alter Biden admin’s original plan. Trump swapped a 10% stake in Intel for Biden’s profit sharing for participating in the grants[0] (anyone who participates in the CHIPS Act gets this deal currently, I guess Intel is renegotiating). Not necessarily better or worse because Intel is a long ways away from any sort of gain that would make a difference.
If you feel conflicted to think this is a good or bad move, you’re right where Trump wants you. Sit down and do the napkin math, you may find the deal irrelevant or numbers similar. In the end we won’t know for a decade the result. The move is meaningless financially but generates headlines and doesn’t do anything to advance the actual foundries.
First, this is different because this was not what was agreed when Intel sought the grant. So I reserve the right to see as ‘bad’ a coercive action.
Second, from your article:
‘ Commerce expects "upside sharing will only be material in instances where the project significantly exceeds its projected cash flows or returns, and will not exceed 75% of the recipient’s direct funding award."
'NOT A FREE HANDOUT'
Democratic Senator Jack Reed praised the profit sharing plan, saying chips funding is "not a free handout for multi-billion dollar tech companies.... There is no downside for companies that participate because they only have to share a portion of future profits if they do exceedingly well."’
Clearly, there was a cap on repayments, but there is not one on giving away equity
I don’t think people are conflicted over the math. The nature of this, the manner in which it went down, and the implications for the future are what people seem to care much more about.
Good. It's very much a "Heartbreaking: The Worst Person You Know Just Made a Great Point" situation.
If Taiwan's NDF has ownership share in TSMC and UMC, China's CICIIF in SMIC, Japan's Master Trust in a majority of enterprises, and Abu Dhabi's Mubadala in GlobalFoundries, then we should as well.
The recent (50ish years) aversion to Industrial Policy in America has been pigheaded and ideological to a certain extent. If we wish to build capacity domestically, especially in high capex and low margins industry, some amount of government support is needed.
Funds that are overwhelmingly sourced via private capital cannot take the same risks to build an ecosystem that a Soverign Development Fund can. This is what the Master Trust (Japan), NDF (Taiwan), and Temasek (Singapore) did to build their own domestic industries in semiconductors and REE processing - industries with high capex, high IP barriers, and low margins.
This now sets the precedent to develop at sovereign development fund.
If we did this with GM and Solyndra a decade+ ago we would have been in a better position to protect our automotive and renewable industry, but ofc the GOP of that era along with a portion of the DNC was not ready to take such a risk.
The CHIPS and IRA acts were steps in the right direction, but couldn't really take full advantage of the stick.
Edit: Surprised that a forum that largely supports single payer healthcare opposes sovereign development funds, even though they themselves could help enforce pricing in a less complex manner than that which the CMS does today.
> Would you still be saying this if Intel wasn’t floundering as badly as it is today
Yes.
I've been a proponent of a Temasek style model for the US since my undergrad days. This would make it easier to commercialize grant funded IP instead of the mess that SBIR/STTR is today.
It was difficult for the Biden admin to do something similar, but at least the traditional norms have been shattered.
As I said above, it's very much a "broken clock is right twice" type of situation.
> Also this appears to be in exchange for CHIPS funds (per the article). HN has universally supported equity in return for bailouts over the years.
Exactly!
And like I have said a couple of times on HN - I view the CHIPS and IRA as the carrot, and tariffs plus ownership stakes as the stick.
There is nothing wrong with with a public-private industrial policy. We ourselves used one until the 1980s with Reaganomics, as did our allies like Japan, Taiwan, Singapore, Israel, Ireland, and others.
And fundamentally, I believe that any industrial stimulus should come with a mixture of government ownership as well as claw-back provisions should interests contravene national security.
Edit: cannot reply to you.
This deal literally comes with claw-back provisions.
The government support should have come in the form of a real competitor. Intel got this way because they had no competition - nobody thought a domestic EULV manufacturer would be an American prerogative in 20 years. All the customers for dense silicon were fine importing it from Taiwan.
Pouring more money into a proven dumpster fire won't put out the fire. This is the protectionist just-desert of refusing to regulate the top-dog competitors into a position where they're afraid to rest on their laurels. If we want an American lithography powerhouse, buying Intel stock rewards exactly the wrong incentives.
In general I would rather the government take a stake in corporations they're bailing out. I think the "too big to fail" bailouts in the past should have come with more of a cost for the business, so on one hand I'm glad this is finally happening.
On the other hand, I wish it were a more formalized process rather than this politicized "our president made a deal to save america!" / "Intel is back and the government is investing BUY INTEL SHARES" media event. These things should follow a strict set of rules and processes so investors and companies know what to expect. These kind of deals should be boring, not a media event.
I’d really rather we didn’t bail out these companies at all. It clearly creates moral hazard and makes it hard for better run companies to enter markets.
If shareholders are losing ownership it's less a pure bailout and more a strategic investment and/or takeover. It also potentially lets the average taxpayer benefit rather than just those its directly propping up.
How does the average taxpayer ever actually end up benefitting point blank?
Profits from the stake lower taxes that would otherwise be levied on you? Of course that’s moot if the deficit isn’t something being taken seriously.
Deficits aren't real and 10% of $0 when they likely go bankrupt is $0
Well as much as you don't like it, companies this big failing is terrible for the economy and in this case, national security to a degree. I'm of the thinking that when your company gets to a certain size we'd be well off nationalizing. Apple has more money than some nation states. Something that huge has the potential to affect global politics. There's lots of other reasons too, but this isn't like letting the corner store fail. The repercussions are huge. If we're going to bail out, the people should own some of it.
As a non-American, a big part of the appeal of American companies was their independence from the American government.
Was.
Chip manufacturing is too important for the US. We can’t be completely dependent on Taiwan. Nothing against Taiwan, it’s one attack away from being obliterated by China.
No company is going to come out of someone’s garage and build a chip fab.
Nvidia has a market cap of 4.5 trillion dollars and everyone is committing hundreds of billions to AI CapEx in their direction - they can afford to organise chip fabs if it really came to it. Ok TSMC and ASML would need to be on board but it could be done. Should be done in fact because even a simple SWOT analysis would show the risk to their business.
If Taiwan becomes practically inaccessible, is there any way another country can setup a competing fab (for the latest generation of chip sizes) without years of R&D? As far as I understand, the practical knowledge of how to do it doesn't exist right now. (Neither does the prerequisite tooling)
So we give a bunch of money to a company with a history of mismanagement and out sourcing chip manufacturing?
We can definitely offer subsidies for manufacturing in the US - we've already gotten TSMC to open several fabs.
And it’s still owned by a foreign country and Taiwan is restricting TSMC from manufacturing their most advanced processors from being manufactured in the US.
https://www.tomshardware.com/tech-industry/semiconductors/ta...
this is not to say that intel will be manufacturing competitive chips to what TSMC is.
are you worried that china will invade taiwan, and then somehow taiwan will still be around to prevent the US fabs from making the best chips?
its a bit far fetched
Same as the US is restricting sale of Nvidia chips to China.
"Someone's garage" is a straw man. There must be people here who could, with adequate funding, build a smallish but viable chip manufacturing company.
It is not a straw man.
There is no amount of scrappy cleverness that gets you from zero to manufacturing cutting-edge chips without shitloads of capital investment, years/decades of R&D, a huge manufacturing workforce, and big contracts.
There's no such thing as starting small and scaling in that business.
I think one of the people who got closest to that was Sam Zeloof.
He kind of had everything going: extremely clever and motivated, cooperation with his parents (who also worked in the industry), access to equipment. Kind of hard to improve on that.
He was able to replicate most of Intel's SOTA process... from 50 years ago. That's more than almost everyone else has managed in their garage but that's about the best you can expect without insane capex and ramp up (and again, it's not like he didn't have access to capital, it just wasn't monetary.) Even still it took five or so years to work everything out.
The SOTA today is really kind of insane. It's right at the frontier of what all of humanity is capable of. Of course as time goes on we'll push that out and today's SOTA is tomorrow's commodity but that won't change everyone's concern with being unable to replicate the contemporary best process.
The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
There is no such thing as a “smallish” chip manufacturer that can manufacture leading edge chips. It’s about scale.
If it were that easy, Apple, Amazon, Google AMD, Nvidia, etc who all design their own chips would have done it.
I agree but by the same logic intel could have done it and didn’t manage to so far.
Flip side: why would Apple, Amazon, Google, AMD, NVIDIA etc build their own when they can outsource it cheaper?
Companies are run to make a profit… they don’t care about sovereignty as long as the money is coming in.
Why is this so hard for people to understand? Intel for years had a massive lead in the market. Instead of investing in the business the clevel suite instead opted for idiotic stock buybacks.
The only good news is that C-level suite can continue to do the same shit over and over again.
The government took 79.9% of AIG in that bailout - which was the biggest of the "too big to fail" bailouts from the past. People seem to forget that the owners of these companies that were bailed out got almost completely wiped out and instead focus on management compensation (which famously stayed high).
If a company has truly become too big to fail that it makes sense for the federal government to bail them out, then why are we even leaving the welfare of the company up to private industry in the first place? It's just asking for ways to siphon taxpayer money out of the government through their willingness to buy shares. It inflates the stock price because it shows that the government might buy more share in the future at market rate. Its operations should be required to be more transparency, since if they're large enough that their failure would dramatically impact the welfare of the whole country, their operations should be subject to more direct democratic will (at least, more direct than the many steps removed from what is happening to Intel).
Intel is public and their financials have indicated this would happen. Even at my most irrationally exuberant their stock buybacks didn’t make much sense.
I’m not sure what “more transparency would look like to you, but publicly traded companies with audited financials are quite transparent. As for the part about siphoning money, history has shown that taxpayers do well. In 2008, the US government took roughly 80% of AIG, sold off their stock by 2012, made a roughly $15 billion profit and AIG is no longer considered too big to fail. It worked and did what it was intended to do. There are reasons to be positive about this.
Don't forget that the US government took roughly 80% of AIG in a move that was later declared illegal and made a roughly $15 billion profit.
It's not otherwise related to all this but a real bug bear of mine is that municipalities don't get part ownership - along with controlling rights for matters like sales or relocations - of sports teams when we subsidize their stadiums through taxes.
I think it's a good choice for Intel as they are one of the very few who own fabs and fabs are extremely valuable pieces of equipment. Just because of 3 consecutive annual CPU "bugs" in essence, they should not shut down forever. Try try again.
The government should avoid bailing out big, uncompetitive corporations. If the government is acting as lender-of-last-resort in some crisis, then it should demand senior debt to that it gets paid back before any shareholder.
They're converting a grant, so Intel is worse off due to this move.
The only real benefit I can see is it looks more revenue neutral because the government getting something of value and Trump is unpopular for spending so much money on unfunded tax cuts.
I think I agree overall, but "these kind of deals should be boring, not a media event" make me doubt that position, because "deal becomes a media event" seems so eventually-inevitable given how democracy works.
I think punishing interest rates are better than an equity stake. As Intel's rally shows, having the government as your equity holder is actually amazing for investors.
Government is starting to be to big to fail. Living in the Great Lakes region its just the reality of it, as the geopolitics of the region are outplayed by idiots in other parts of the state.
The government is not 'bailing' Intel out. Intel's CPU business is profitable. Their manufacturing is not. America gave intel grants to build better manufacturing to secure America's national security interests. Congress did not authorize any acquisition of Intel shares.
All the talk about this from a business / investment side leaves out the simple fact that this is not actually authorized by anyone with the power to actually do such a thing.
Essentially, the government, elected by the public, voted to offer grants to intel, and then intel shareholders woke up today to find their equity had been diluted.
In the end, it turns out that people didn't dislike Chinese policies of nationalized industries. They only disliked that the Chinese were doing it.
I can't wait for the "I don't think social credit scores are a bad idea. Cancel culture is good actually".
"People" you are referring to want a level playing field. If the Chinese government is tilting the field, there aren't a lot of good options. You can either watch the Chinese subsidize draining most productive capacity from the rest of the world, erect trade barriers (my preference, but it would require cooperation with other countries, which... ain't gonna happen for a while now), or try to tilt back.
But that wouldn't give great ratings.
Tesla was saved by a $500 million bailout loan from the DEO loan office. Part of the agreement was that the US government would take a stake in Tesla UNLESS they pay back the loan ahead of schedule. That's why Tesla paid it back ahead of schedule, Elon didn't want the government to take a stake. But he spun it as a victory for the US tax payer.
I agree. In fact, I think the government should own all utilities like they do in more socialist countries. It gets rid of price gouging, and the stabilizes the market in things that are necessary for human life.
The natural resources of the country should belong to all of us. Not just a select few.
Utilities are already strictly regulated by cities including prices. There is no price gouging when it comes to utilities.
What bothers me is the double standard.
When the public asks for fully publicly-owned railways, universal healthcare, or any basic social safety assurances—“socialism”.
When a megacorporation struggles, immediately to the rescue.
Bailouts aren't following some rules of fairness, they're for specific reasons like preventing greater economic problems (2008) or national security (probably Intel). You might disagree that those are the best ways to address those risks but that's why we elect the government to make those decisions and act on them instead of letting the country collapse - which is arguably more important than social services which won't really matter if there's no money to fund them or the country has been taken over by some hostile enemy.
Is like the country is not already collapsing due to lack of social services compared to the supposed enemy which already has higher lifespan while having 10x lower gdp per capita.
Not a serious problem in the same sense that a military conflict would be. Different categories and different concerns.
That’s fine. But when the gov is picking winners and losers, that not a free market. What it is, it is. But it’s not a free market based system.
> Bailouts aren't following some rules of fairness
And people wonder why populism came back. Huge transfers of wealth aren't about 'fairness', its about preventing greater economic problems that the people who received the bailout say will happen if they don't get bailed out.
At the end of the day, this line of thought is going to fuck over the country far more than any depression would.
It’s not a double standard, you just don’t understand the standard.
It’s a triple standard you just can’t count.
One big difference is management control. People feel that government administered services tend to have poor management and citizen services more often than not. One big example is the DMV since almost every has experience dealing with it, long queue times are almost universal because no one gives a crap and it's very hard to fire a government employee. Or the passport issuance, or applying for permits. Or unemployment benefits, the list goes on and on.
Imagine if the DMV and passport services had even the possibility of competition like a private company has. You bet all of a sudden the service would get much faster and better and with fewer mistakes and red tape with the same or fewer number of employees. Or someone would set up a competitor and imagine how many people would even pay extra just to not waste several hours of their time.
It's tax payer money so there is a lot more waste than even at big private companies. For example, the costs to just administer and operate the social security administration(not including any money paid out to recipients) is $15 billion dollars with a big B. There is no incentive for anyone to save the tax payer any money and there would be a huge pushback from govt contractors, unions and employeees. See how much hate DOGE gets for even proposing cuts or higher efficiencies.
Any large IT project in the government in almost any country and at any goverment costs huge amounts while not returning much value if any. Look at the state and costs of local metro stations and trains in almost any city.
That's interesting example to choose, as I've actually heard often that the Social Security administration is an example of an efficient government administration.
For example, a quick Google search shows administrative overhead as around 0.5% of benefits: https://www.cbpp.org/research/social-security/top-ten-facts-...
> See how much hate DOGE gets for even proposing cuts or higher efficiencies.
I don't think many people believed DOGE was ever intended to improve government efficiency in any real sense.
Well, my local DMV is much more efficient and friendly than the private health insurance company I have to deal with.
But part of that is lack of competition. I can't really switch to a different insurance company, because the one I am with is heavily subsidized by my employer.
And BTW, I agree that Social Security overhead is unacceptable. It should be privatized and increased to at least $500 billion to be comparable with health insurance companies.
It's not acceptable at all to make private companies look bad.
In my entire life, I spent much less time in DMV offices than on the line calling AT&T's customer support.
USPS has also been great overall.
Genuine question-
How does Govt picking winners and losers going to help?
Intel is no Too big to fail Bank. Why save Intel of all chip manufacturers? Wouldnt it be like 25 years too late, with Intel and its heydays !?
Would Govt now ensure parity by investing in "marquee" entities across different industrial domains?
There is only 1 winner and 1 loser: Intel.
It's the only chip manufacturer "left" in the US. The argument is national security: the US expects China to invade Taiwan and this will kill TSMC in the process.
Whether this will happen or not can be debated, but this is what the government expects.
> It's the only chip manufacturer "left" in the US
Global Foundries, Micron, and Texas Instruments all come to mind
GF hasn't gone past the 12nm node. TI is at 45nm. Micron is on relatively recent processes, but they make RAM, not logic (which are totally different processes). Intel is the only chip manufacturer left that is working in logic at anything like the leading edge.
GF is a few nodes behind. Micron doesn't make semiconductors, they mostly make flash and whatnot. TI doesn't have the capacity or knowledge to expand to Intel's size/capacity
> TI doesn't have the capacity or knowledge to expand to Intel's size/capacity
I mean, they might if Intel were allowed to fail.
> doesn't make semiconductors, they mostly make flash and whatnot
Um.
All that stuff is still semiconductors, just with different patterns printed on them.
re: Micron - Memory is very different from logic chips. You vast number of repeating cells in memory. If any of them are bad you can just turn them off and bin them as lower capacity. You can do that to some extend with logic chips but not nearly as much as memory.
Yeah terrible position to be when your own government is investing in your competitors' company using your own tax dollars.
As a software engineer, this isn't an entirely new concept.
I think all three of those other companies are also getting CHIPS-act subsidies?
I suppose it could be worse. Still, now the US has a vested interest in seeing Intel crush AMD and others.
They just need to bribe POTUS, and everything will be fine.
AMD is not a chip manufacturer and what “others”?
Right, AMD sold off their foundry business as GlobalFoundries in 02009 to the Mubadala sovereign wealth fund of the UAE: https://en.wikipedia.org/wiki/GlobalFoundries
> the US expects China to invade Taiwan and this will kill TSMC in the process.
Would it though? The TSMC foundries are pretty much in every continent. Are they just going to stop operating if this happens? Because that seems akin to killing a golden goose.
Also what is up with Global Foundries? I don’t hear a peep about them.
GF is like a decade behind in research. Without years to ramp up and update their fabs they're not relevant.
Probably closer to two decades behind at this point.
Global Foundries is on 12nm. TSMC is at 3.
TSMC gets their machines from ASML who licenses their technology from the Department of Energy. The US will be OK.
If (or when) China invades Taiwan we will be better off than Taiwan but I wouldn't call us "OK" at that point. That will be a major disruption.
It will take decades for the US to get where Taiwan is now in semiconductor manufacturing, if ever. It's not just about building the most advanced chip factory. It's about re-aligning the entire nation's value system and culture to allow such development to happen in the first place.
We complain about the money we spend already. And now we're supposed to subsidize an entire industry to the point where we can build the most complex machines known to civilization at scale in a time-frame that matters to a global conflict that's potentially approaching soon? I don't see it.
If it was that simple, Intel, Samsung, etc. wouldn't be behind TSMC. There's a lot more to it than just buying an ASML machine.
This shows me you are not aware of just how much work goes into EUV and beyond besides simply buying the machine.
And the current administration is unlikely to help Taiwan in the event of said invasion.
Exactly. Expect to see some kind of additional intervention such as forcing a certain number of chips that currently go to TSMC to go to Intel.
I see it different. The loser is the taxpayers. The loser is the market, which is less and less free. When there’s no incentive to run your company correctly… we get another company not run correctly.
This is my thought on it too. I don't think this is meant to be a political win so much as US intelligence views chip manufacturing extremely strategically. I also don't know about what will happen to TSMC. But the US has been pushing for US made GPUs as well. This goes back to Biden's admin as well.
https://www.tomshardware.com/tech-industry/us-govt-pushes-nv...
so.. shouldn't US take stake in TSMC instead?
Texas Instruments and Microchip: Am I a joke to you?
I'm surprised to see on https://en.wikipedia.org/wiki/Microchip_Technology that Microchip does in fact have fabs. I thought it was fabless! Its fabs are in the US, but the assembly and test facilities are all across the Pacific.
As far as I know none of them manufacture anything resembling a replacement for a Xeon, which is relevant to national security because those are uses in military applications.
Neither of them make high performance CPUs or GPUs
If the argument was for protecting Intel, then the US government should be placing huge orders with Intel for solutions that will fund R&D and allow the company to regain its position as a foundry. They should be tapping into the defense budget. DARPA should be involved. This was an opportunity for petty extortion and a step towards socialism.
Government involvement is the fastest way to corrupt the purpose of an organization, hollow out its soul and quickly get rid of all the competant people. There's a reason that the DOGE findings made a laughing stock of government employees.
And now China knows the US expects this and it also knows the US does not expect to stop China, so China knows that it can expect the US to do very little. It's game theory turtles all the way down...
Edit: I think it's a misconception that China cares much about fabs in Taiwan. It wants unification.
It also means that China can expect the destruction of Taiwan's fabs to hurt the US less than China.
Combine that with the US's ability to unilaterally destroy Taiwan's fabs, and it sways the calculation a bit
The only charitable answer I could give is national security reasons for having domestic chip production, and even that could be accomplished in ways that don’t require the federal government having an ownership stake in Intel. For example, I don’t think the federal government has ownership stakes in Lockheed Martin and Northrop Grumman, despite those companies’ dependence on the military.
There’s a legal precedent that’s no doubt being abused. The Lima tank factory and Watervliet arsenal, for example are owned by the US government.
I don't expect a good reason given the history of this Administration, but a reason in my mind to save Intel is there's only 3 license holders for x86 CPUs. Intel, AMD (American), and VIA (Taiwanese). A dead Intel leaves a single American company that is able to make x86 processors, and a monopoly for actually good x86 CPUs. But somehow I suspect there's no logical reason for this besides lining the pockets of those in the Administration.
Why would the ISA matter to the government? I could see this being about Intel's physical manufacturing capabilities, but the ISA should be pretty irrelevant. Recompile what code you can, run the rest via qemu-user-static.
What is missing is that Intel has US based foundries and US based talent.
A dead Intel could open the door to have more then three license holders. Isn't Intel the reason there are only three license holders?
While there are other good reasons to save Intel, if it went under, someone could still buy the license. I can’t imagine why anyone would want a license to x86 in 2025. It’s not like all of the companies designing custom chips are going to be falling over themselves to design use the x86 ISA.
What about Hygon?
I haven't heard of them until this comment, but reading through Wikipedia, and a techpowerup article, I'm not seeing that they actually own a license to manufacture x86 cpus freely. It seems like they were able to due to it being a partnership with AMD. I could easily be wrong though.
From my vague understanding I thought that Hygon is able to build atop Zen 1 IP that AMD gave Hygon, although they can't get anything newer because of restrictions on doing business with China.
Hygon still seems to be making x86 CPUs: https://www.techpowerup.com/336529/hygon-prepares-128-core-5....
You are asking why save Intel of all chip manufacturers, and the answer is because there aren't any other major chip manufacturers in the US.
AMD no longer has a fab. TSMC dominates the global market and basically has no competition.
In the event that Taiwan is invaded, the US would suddenly have a huge problem getting access to any kind of high end chips, be they CPUs or GPUs. This would be a major problem economically and militarily for the US.
Some caveats: Due to the chip act, TSMC does now have fabs Arizona, though I'm not sure what their capacity is. TI, and some others building lower end components also have fabs I believe. For x86, high end ARM, and GPU's, virtually all of that is manufactured by TSMC right now, mostly in Taiwan.
> TSMC does now have fabs Arizona, though I'm not sure what their capacity is.
180,000 wafers a year. Globally they do 17 million. They announced first profit yesterday.
This is a sure giveaway that the US military depends on Intel. It is the only major chip producer that has fabs in the US, and it is also the creator of the x86 architecture. That would mean that without Intel the military would become dependent on chips from Chinese Taiwan.
Not just the military, but the majority of consumer devices as well.
With Intel maintained, if China invades Taiwan and takes TSMC the US will still be able to make usable processors. They won't be the latest and greatest like TSMC, but they will be good enough. Maybe not the most powerful or efficient, but still rather close.
My only worry is this will mean management will start resting on their laurels and things will just continue to deteriorate. Or maybe the government can convince them to get rid of the bad management and start thinking more long term and less about immediate profits.
They are the only US company that can produce cutting edge chips now and realistically within the next 15+ years. It doesn’t matter that TSMC produces chips in the US. That is nice for the short term but doesn’t do much for the US in the long term if TSMC falls under China’s influence.
Intel is in the midst of a dramatic turnaround and huge shift in strategy. It might fail. But if they succeed it puts Intel and the US in a much stronger position in terms of technology and military leadership.
It mattered for China to have Apple/Foxconn/etc assemble phones in China. By this same logic, won’t TSMC have more tacit knowledge to offer America than Intel, even if their independence is short-lived?
Why would TSMC or Taiwan want to give that information to the United States? There is a strategic reason why TSMC does not build their latest nodes and processes in the United States and why their R&D happens in Taiwan. They want / need The United States to protect Taiwan and their interests. It opens up strategic options for the United States if Intel or another US based company can produce cutting edge chips in the ballpark of TSMC.
This isn't a generalizable problem. There just aren't many companies that would be in a comparable situation to Intel.
Intel is:
* Critical to national security
* An advanced, industry that's extremely hard to spin up
* Essentially, one of two companies in it's industry.
Very few other companies meet all of those criteria.
They supply components for the defense industry, where foreign production isn't a viable option. No one bank is more important than that. This is also why Micron is getting a free fab for strategic redundancy despite no clear reason why they would need 2x capacity after onshoring back to Boise.
Free market capitalism is great until you’re about to be the big Loser. And then the big dog steps in and yells for time out.
I think if this was a domestic thing it would be all kinds of dumb and wrong. But as a US National Security thing, it makes sense if you’re of the mind that significant intervention is fine when it’s in your country’s best interest.
The next phase is watching the U.S. government keep Intel on a palliative drip of softball contracts and tax dollars. I guess there’s a fair argument that this form of bail out could help Intel thrive again… or at least secure a domestic supply of chips for natsec reasons?
This government? Bribe them on the side.
I take that back. It's the old one you bribe on the side, this one you can bribe in the open.
What other US based chip manufacturers are there?
>Wouldnt it be like 25 years too late, with Intel and its heydays !?
wtf? what do you mean, they're like less than 1 year behind TSMC when it comes to leading node
x86
Because Dump personally pictures being able to instruct all personal computers to "dont do woke"
The end result is more like all the rich people take their cash and jump off the top of the pyramid as it crumbles
> How does Govt picking winners and losers going to help?
By ensuring that the US retains at least the ability to manufacture second tier CPUs vs complete reliance on Asia? This doesn't seem unreasonable.
Maybe Intel should have invested in the USA instead of Israel.
Achieving that doesn't need to take the form of a 10% stake in a flailing company.
The US can't employ poverty-tier labor to enable competitive margins, though. American businesses and global trade partners already largely reject Intel's foundry services.
Labor is not the key factor driving chip prices or performance. Fabs are highly automated and filled with extremely precise machinery. The maintenance and upkeep of machinery, the yield per wafer, and consumer demand drive the prices. Labor is basically a rounding error.
Doesn't matter. All of the US's advanced weaponry systems now use "state of the art" electronic systems, which in the context of defense only means "not decades out of date." Two or three generations old is perfectly fine. The military does not need the latest and greatest CPUs and GPUs going into the iPhone 17 or whatever, but it does need the equivalent of the chip in the iPhone 12 or iPhone 8 or whatever for integration into next generation weapons systems.
But if all of our advanced weaponry used chips from Taiwan or Korea, for example, then the strategic implications for war in East Asia would be radically different. People are right to say that China could engage in war over Taiwan for chips, but for the wrong reasons. It's not that they want access to the fabs (they'd love it, but they're not stupid and they know the fabs and know-how would be destroyed in the war), but it would deny the US defense industry access to those fabs.
If US missiles or drones use chips from TSMC, and TSMC is in occupied territory or a war zone... the US can't make more missiles or drones. And no matter how powerful your starting position is, you can't wage war without the ability to replenish your stockpiles. It's the bitter lesson Germany learned in both world wars.
China wants hegemony in Asia, and to remove the influence of the US, Japan, and their allies within what they perceive as their exclusive sphere of influence. How to achieve that? Invade Taiwan, which eliminates western access to TSMC one way or another, effectively blockading western defense industry from the core things they need to resupply their militaries in a war. Like WW1 all over again, a "preemptive war" becomes the game-theoretic optimal outcome, and the world suffers.
How to counter that? The US and its allies need to make sure they have access to chip fabrication facilities that can produce near-state-of-the-art chips, even at inflated prices that are not commercially viable in peacetime, as well as the necessary strategic minerals like germanium and lithium. Only then does calculus swing the other way in favor of peace. Hence Biden's effort to get TSMC to build SOTA fabs in Arizona, and when that failed/stumbled, this investment in Intel.
The China narrative is pure nonsense. You always have guys like Gordon Chang pushing alternating stories about the coming collapse of China, followed by a scary hegemonic whatever.
Regardless of whether you believe the China narrative is true or not (that is to say, whether China will actually do this or not), it is driving US policy.
Haven’t you read Curtis Yarvin’s vision for America? Our leaders, VCs, and owners have
I don't care how nihilist or kafkaesque you want to take the conversation - the math won't check out. You can't sustain a third-sector economy on second-sector jobs while importing first-sector goods. The entire financial system in America won't survive that sort of transition, it would be the Great Leap Forward of the 21st century.
One of the things about the Great Leap Forward is that it happened. Just because a path of action will obviously lead to mass death and suffering while accomplishing nothing doesn't mean it won't be taken.
Yeah why not fund a new foundry startup?
It would take a decade and hundreds of billions of dollars with no guarantee it would work.
It's a terrible idea
That's extremely risky, like 100 to 1.
Sure tough business but, risky compared to what? Intel?
Yeah. Risky compared to Intel. Intel manufactures chips _right now_. They have lost their process edge, but if I have to put chips into a drone tomorrow, I'm betting on Intel rather than any bag of scrappy kids. The risk that they _can't_ produce chips is the same risk as that of Hillsboro Oregon getting carpet bombed -- which is of course not 0%.
Note that there are several drone microcontroller manufacturers based in the U.S. right now - ModalAI, ARK Electronics, Rotor Riot, etc.
The thing about drones is that they actually don't require much computational power compared to modern consumer computing. It's just math - control systems, calculus, trig, waypoints, etc. All of these were solved problems in the days of the Apollo Guidance computer, and will run comfortably on chips from 2 decades ago. The STM32F722 microcontroller that is one of the most common hobbyist drone chips is built on the 90nm process node, runs at 216MHz, has 512K of SRAM, and costs about $5/chip. FWIW, it's made in France and Italy rather than China, and STMicroelectronics owns its own fabs rather than outsourcing to TSMC or Chinese companies.
If you want to do things like computer vision on the drone, the computational requirements are quite a bit higher, but you can still run something like YOLO at orders of magnitude less computational power than what you've got in a Pixel 9 or iPhone 16.
...which makes me wonder if a better strategy for the military would be to fund a wide variety of domestic chip manufacturers operating at decades-old process nodes (eg. the 65nm process node from 2005 seems to be at about the sweet spot), rather than try to prop up the one American company that can compete on cutting edge 7nm process nodes. Particularly since the experience of WW2 was that simple, robust designs that could be easily licensed to other suppliers and mass produced (eg. the Hawker Hurricane, Grumman F6F Hellcat, Grumman/GM TBF Avenger, Liberty ship, escort carrier) were much more effective at turning the tide of battle than designs that were on the cutting edge of technology (eg. the Vought F4U Corsair, Gloster Meteor, Japanese Shinano aircraft carrier). The latter were often better in absolute performance, but arrived late, in small numbers, and with teething troubles that made the former carry the bulk of the battle. The Liberty Ship, for example, used reciprocating steam engines that were 50-year-old technology in WW2, but they were "good enough" and dead simple to make.
If you think getting a couple million dollars of funding and expecting to show profitability in a few years is hard, just wait till you try it with billions and 5+ years.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> Of the total, $5.7 billion of the government funds will come from grants under the CHIPS Act that had been awarded but not paid, and $3.2 billion will come from separate government awards under a program to make secure chips
Interesting accounting there. I guess the government was threatening to void the grants or something? Why would Intel donate shares for grants already approved?
I guess this nets out to a stock issuance with no downward price pressure, so still not a bad trade for Intel if they thought those grants were worth nothing.
Because this clears the way to sell Intel Foundry and separate the chip design from the chip-manufacturing businesses completely.
The CHiPs act money had claw-backs such that if Intel sold the Foundry off they had to pay the government all the money back. This new deal waives all the clawbacks and says instead the Government gets warrants, good for five years, for 5% of the company at $20/share, good once they control less than 51% of the Foundry.
Ergo, the reason for the deal is that the board wants to sell off the Foundry, and didn't want to pay back the CHiPS act money.
Just another Trump shakedown. Nothing to see here.
This feels like another signal that the U.S. as an economic superpower is transitioning into something else.
I guess this is kind of like an auto or bank bailout, but is there something to bail out, or are they just gaining ownership of a doomed (in the classical sense) corporation?
North Korea in the streets, Venezuela in the sheets... :)
[Ex Post Facto Clause, US Constitution](https://www.congress.gov/crs-product/IF11293). Oops, I thought it was so obviously going to be done away with in the courts, but in 1912 the Supreme Court ruled that it applies only to criminal punishments.
They always getcha with the fine print.
The Supreme Court’s standing doctrine is also weird. If the board of directors approves it, then would the shareholders even be able to sue?
I have a feeling I'll be waiting a long time for the old "Tea Party" to rise up again and start protesting this.
If the US had bought 10% of TSMC, with no voting rights - just increased dependency - it would have sent a very strong signal.
Its an interesting idea, not a serious suggestion.
That would have cost more than $100billion, not the $10billion for the same sized stake in intel.
Shakedown list: Nvidia 15% of revenue AMD 15% of revenue Intel 10% of capital
Who else is next?
A deal for 15 percent of revenues of specific AMD and NVidia part sales in China != 15 percent of all their revenues, not even close.
Rare earth miner MP Materials back on July 10. Next feels like TikTok or Fox News.
Intel press release:
https://newsroom.intel.com/corporate/intel-and-trump-adminis...
So no shareholder vote required?
It is equivalent to a 10% dilution (shares issued for no extra cash).
No, the shares already existed, they were just held by Intel. According to their most recent 10-K, 10 billion shares of common stock are authorized, but only 4.33 billion were issued and outstanding.
How can this be any good for Intel? Why is the stock value bumping 6%?
The CHIPS grants had clawback provisions, which carry risk. This transaction removes that risk, so it's very good news for Intel.
> The existing claw-back and profit-sharing provisions associated with the government’s previously dispersed $2.2 billion grant to Intel under the CHIPS Act will be eliminated to create permanency of capital as the company advances its U.S. investment plans.
Because the government having a financial interest in Intel’s success is expected by the market to result in the government acting in Intel’s interest, in order to profit.
They also have a national security interest as well.
It means Intel is far worse off than publicly acknowledged, and without this it might be worthless.
It doesn't mean that.
Sometimes, there are returns on investments beyond what an accountant would calculate, but the investment only costs the same. Making stock priced only for normal returns a buy for beneficiaries of said additional returns.
In this case, reducing the risk associated with the imported chip supply.
lol, buy buy buy buy BOOYAH JIM
It's interesting that Trump's announcement of this includes a claim that the government has acquired this 10% stake without paying anything for it. Of course, that's probably just bluster to impress the more impressionable part of his base, but I imagine Intel's CFO isn't going to sleeping well for the next few years.
This is worse than I expected. They're apparently putting in no new money and retroactively demanding stock in exchange for grants that were already awarded. If Intel can't afford to build 14A and we're putting in no net new money... then Intel still can't afford 14A? Unless they were lying.
It's just cronyism and bribes. Nothing more to it. From "he must go" to "Intel is so great that we demand a 10% stake” in a week. Mussolini-style.
There werestrings attached to the CHIPs act money. Not saying this is some great deal. It isn't. It is a deal made from a place of necessity and weakness for Intel, but it gives them the cash infusion they need in the short term. Right now Intel's only goal is to have enough money to get 14a off the ground and attract at least one large external customer to prove their capabilities.
Maybe it’s more about affording 641A
... what would a chip version of 641A even look like?
If it involves (a) identifying / filtering stuff they want to spy on (b) sending it back to one of the intelligence agencies, it seems like both would be hard to do well and secretly ... right?
So the US is getting lower-case intel here, in addition to upper-case Intel.
Or they just devalued all of the current stock holders. Intel needed the capital, not Intel stock
Ironic, Western politicians thought opening up to trade with China would lead to it adopting a Western model of government. Instead it's lead to the USA adopting the Chinese one.
We all share a common stake in Intel now comrade. Just what Republicans have been calling for all this time.
Yeah, this so weird coming from the US. The US government has a history of writing no-strings-attached blank cheques to people/companies just so avoid the stigma of government control in public companies.
I wonder how the markets will react, will stocks go up because people will assume Intel's going to be a government mandated champion or will they go down because of the negative connotations government control brings?
Name one literal no-strings-attached blank cheque to a large company in the last 20 years
Lol the jail free bailouts of the banks in 2008? Goldman got billions from the bailout of AIG, management got millions and millions in bonuses....
Perhaps not strictly “no-strings-attached” but many of the 2008 bailouts were functionally mechanisms to avoid nationalisation.
https://en.wikipedia.org/wiki/Solyndra
https://en.wikipedia.org/wiki/CHIPS_and_Science_Act
Any Federal corporate tax relief at all. They put the pedal down on accelerated depreciation after 2008, though it existed over 20 years ago.
Any swapping of Federal Reserve bonds for corporate bonds, say during the pandemic.
Any cost-plus defense or aerospace contract.
Kinda. But I think the current Chinese model is actually much closer to how the USA used to work when there was competition with the USSR. Closer than the US of today compared to the 70s and 80s.
The current Chinese model's basically you have fully publicly traded companies, companies who are either minority or majority owned by a certain provincial government and ones who are either minority or majority owned by the central government (although this is surprisingly rare outside of key areas like telco/banking)
Something like 60% of the top of 100 companies in China are entirely state-owned. Most of the rest are government stake
The US never owned a brewer, an airline, the major defense giants, etc.
"Air America was an American passenger and cargo airline established in 1946 and covertly owned and operated by the Central Intelligence Agency (CIA) from 1950 to 1976."
https://en.m.wikipedia.org/wiki/Air_America_(airline)
And adopting a Russian government model.
It somewhat makes sense in terms of industries which are deemed strategically important. Intel needs to start thinking long term instead of short term profits.
> Intel needs to start thinking long term instead of short term profits
Which is what the last CEO was in the middle of doing and he got fired just recently because they couldn't stomach it
OP didn’t make a value judgement about which model is better or makes more sense!
The CHIPS act founded the National Semiconductor Technology Center for this purpose. As for Intel, they aren't even achieving short term profits…
Intel has had a couple years of saying they were going into a more long term vision and failing, and it’s unclear how direct government ownership will make them get better at execution
if someone believes this, they should buy intel and just do it outright! But no one does because it's not as easy as "just think long term" - if it were, berkshire has the liquid money to buy intel several times over.
A large new powerful shareholder come in supporting long term thinking does make a difference.
Public shareholders are generally short term motivated.
One clear reason it doesn't make as much sense to Buffet is he wouldn't get the national security hedge that made the stock a buy for the government.
You need to study history. US government is no stranger in getting stakes in businesses. Did you already forget the Great Depression?
https://www.investopedia.com/articles/economics/08/governmen...
We aren't anywhere close to being in a depression though. What extraordinary situation requires the government to take a stake in a public company and under what conditions will this position be liquidated?
That's very cute quip but I notice that it places the blame on 'trade with China' for an alarming problem that is in fact entirely the doing of US voters expressing their values (or the lack of them) in fair elections.
A more interesting question is whether that voterbase's idea of what they were voting for does or doesn't line up with what they got.
post hoc ergo propter hoc fallacy
(Also, pet peeve: "it's lead" should be "it's led".)
Western governments have taken a stake in, nationalised, or owned / operated corporations for a very long time!
Some examples: VOC, BBC, national airlines, etc.
List across countries: https://en.wikipedia.org/wiki/List_of_government-owned_compa...
US specific: https://en.wikipedia.org/wiki/State-owned_enterprises_of_the...
Most of these were done under duress or specifically for public goods (BBC, for example).
Taking an ownership stake in broad daylight for political favors is very much unprecedented in the modern economy.
> Most of these were done under duress
So the Intel case not done under duress?
> Taking an ownership stake in broad daylight for political favors
The article didn’t spell it out or maybe I missed it but what political favors?
It's not if you now live in a (if not soon) dictatorship.
Calling VOC an offshoot of a western government with any modern relevance is a HUMONGOUS stretch
The Chinese have been surprisingly willing to let companies and sectors die even at the expense of growth (see real estate), I think it's honestly too charitable to compare the US to China, which has at least some degree of technocratic governance, the US went straight for something out of the Tropico franchise
The promiscuous relation between government and tech is as old as Silicon Valley. I'm fact, it created Silicon Valley. It started when people in China were still building backyard furnaces.
Who ordered the Chinese people to build furnaces in their backyard?
Some guys who wanted to make China Great Again.
It’s not “adopting” the Chinese model yet, so much as incoherently copying bits and pieces. If you want to run effective industrial policy you need sufficient state capacity and an army of technocrats who are experts on industrial policy. Trump’s second term performance gives no hope on both fronts.
We even have no assurance of keeping private property via civil asset forfeiture!
Private ownership was the adults main point of pride to distinguish from the Chinese when I was growing up.
And now the Chinese private property frameworks are closer to ours and ours are closer to theirs.
Civil forfeiture existed since 1660s, and was used initially to confiscate smugglers' vessels. Then it was dug out during Prohibition, and turned toxic in 1980s when the agencies doing the forfeiture (e.g. police) were allowed to keep the confiscated property. Ideally it should be used for restitution (e.g. to victims of fraud), but...
I suspect you were growing up when this was in full swing already.
We also have criminal forfeiture, which was leveraged a lot more then. Civil forfeiture use expanded dramatically in recent decades due to profit sharing with DOJ alongside court challenges failing, suggesting the need for constitutional amendment if awareness of the practice improves.
Both should have more reforms.
Ha! Too perfect
No, I think you're missing the wag-the-dog portion of this event.
We're living in the time of irony. Up is Down, Left is Right, Right is Left. Republicans have become Socialist. Free Speech absolutist now against Free Speech.
> Intel said that the U.S. government won’t have a board seat or other governance rights.
What rights does this refer to? Normal shareholder voting rights or something else?
They will vote with the board
Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point.
Speaking of things that wouldn’t surprise me, if Intel can’t manage an about-face in the next three to six years I fully expect them to become a Nationalized enterprise if only to preserve fabrication and chip design capabilities domestically. Same with Boeing given their less-than-stellar track record of late.
The current conflict is over domestic manufacturing capabilities. That’s where it will continue to rage until and unless full-fledged war breaks out. It doesn’t matter how many chips are designed domestically if all production capacity is in Asia within China’s sphere of influence. Intel is a major outlier for chips, as is Boeing for aerospace.
> Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point
I'm not sure how this applies.
The US government just gained a 10% stake for nothing (that wasn't already given). Effectively going from the scenario you are painting to now taking a part of the profit as well.
I guess you were surprised after all!
I wonder if this means the US is going to come for Global Foundaires, TI and Micron to extract an equity stake too. Interesting times.
TI and Micron probably. Not sure about GloFlo - UAE's Mubadala has a very strong controlling stake in it.
I’m reminded that Chrysler took a big loan from the US government in 1979, $1.5 billion which today is equivalent to about $5.9 billion USD according to the inflation calculator I found.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars
I don't understand. Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
The answer is in the paragraph in between the two you quoted from. The money for the purchase has already been appropriated by Congress and awarded to Intel. The awards didn't previously have this giant string attached where Intel gives stock in return. But now they do.
And it makes sense that Intel is spinning it as a generous investment from the gov't, but the gov't is spinning it as a free gift from Intel. Neither account really paints the full picture, but each one paints themselves as coming out ahead.
Isn't that pretty bad, Darth Vader style changing of previously agreed on deals ?
Not sure how anyone can believe anything that was agreed will hold in such an environment. :P
Yes, but its semiconductor industry so its complicated.
Intel got money via grants from the chip act and via other governments. Part of the reason they got that money was to help them build the chip fans in the USA and funding research and workforce in other nations. The fact Intel has claimed its slowing construction basically is a full 180° spin and will set them back in manufacturing ability.
Previous CEO strategy was focused on heavy investment in catching up on manufacturing ability. But once you get stuck on a node it becomes expensive to catch up.
New CEO is clearly trying to shed weight. They have let go of a significant % of workforce, stopped certain projects all together, and seem to be basically selling off parts of their technology and assets to keep cashflow positive.
Given the current CEO and his history and connections, plus the US government involvement it looks like a rocky situation.
New CEO wants to keep the fabs though. It was the board chair pushing him to cut the fabs.
That's precisely how private citizen Trump ran his businesses as well. Make an agreement with contractors to get work started knowing full well those agreements were never going to be honored. Instead, refuse to pay anything forcing contractors to renegotiate at much worse terms vs not getting anything at all. The whole time banking on these contractors not willing to fight in court. That was the art of the deal
The art of the deal isn't a deal. It's extortion.
> Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
Extortion.
Recent Supreme Court decisions have permitted the government to unilaterally cancel disbursements, even in flagrant violation of the plain text of law, impervious to preliminary injunctions, and then put up procedural hurdles to significantly increase the cost of reaching a final judgment in favor of the plaintiff. See, e.g., the most recent decisions issued this week in National Institutes of Health v. American Public Health Assn.: https://www.supremecourt.gov/opinions/relatingtoorders/24
I had seen that, but I don't consider that "paying nothing". That's paying something. I'm also confused how it's a "grant" if it's completely transactional. That's not a string attached, that's just a purchase. So I guess it's just political spin on all sides.
The thing you're missing is that it was different administrations offering the grant vs the "investment".
Boardroom politics...
Everyone saves face.
What does Intel get? I suppose it ensures that the grants aren't cancelled.
I think a better rephrasing is "government is giving $8.9B from the CHIPS act in exchange for a 10% stake in the company"
Depends on who you ask. Trump himself seems to think the US is getting 10% for free. I think that's a fair assessment given that these grants were already supposed to be paid out to Intel, without any kind of equity stake promised.
Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant. Samsung, TSMC, Micron and others were granted similar funds without any kind of withholding or demands for equity from the federal government.
> Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant.
So far...
> Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant.
Sure, but Intel's new CEO is making a lot of noise that indicates that Intel is maybe not going to be able/willing to build some-to-many of the things the CHIPS money paid for.
Giving FedGov a 10% stake in the company [0] is better than taking the money back for nonperformance, wouldn't you say?
[0] Which -as I understand it- was the sort of thing that was done for those finance companies that were Too Big To Fail when all that fraud^W novel financial engineering eventually caught up to them.
Trump feels Biden gave intel billions for nothing. Trump feels he’s balanced the scales by getting 10% of Intel. Trump gets to spin it as getting 10% of Intel for nothing.
Win win for Trump.
Getting stock in exchange of grants makes more sense than "pure" grants.
This stock can later be sold, to benefit the taxpayer.
that's not a grant. That's just buying stocks.
It's effectively a grant. The US government isn't buying existing shares. Intel is issuing new shares and selling them to the US government - so actual money is being transferred to Intel (and existing shares are being diluted as a result).
That's just buying stocks (at-the-market offering).
Nope.
When I buy stocks at market price, the company gets none of my money.
When the company issues new stocks and sells them, the company gets the money.
I think you're maybe unfamiliar with what an ATM offering is; try googling it.
If someone from the Mafia comes to you and asks for a 10% share of your restaurant you better say yes.
When you're really familiar with extortion, everything looks like an opportunity for extortion.
Yes, but in this case the restaurant was already empty of customers on most evenings.
Breaking into an empty locked building is still breaking and entering.
So then it’s fine?
My point was that Intel is already in need of rescue investment all on its own.
I'm just pointing out a limitation of the Mafia analogy.
As long as there’s still cash, there’s plenty of stuff to loot.
Socializing a corporate venture with peace time debt seems counter to the ideals of free market capitalism. Even the takeover of "government motors" (GM) during the Great Recession left many concerned about government overreach. Boeing killed people with a bad product, and they only faced a fine without direct equity takeover.
The clearer picture comes from Reuters[0], as usual:
>The government will purchase the 433.3 million shares with funding from the $5.7 billion in unpaid CHIPS Act grants and $3.2 billion awarded to Intel for the Secure Enclave program.
So the same playbook hes taken across the board: cast aspersions on leadership, withhold duly appropriated money in contravention to the law. Rinse repeat.
[0]: https://www.reuters.com/business/trump-says-intel-has-agreed...
They're nationalizing it
This sounds bad. Can someone steelman this for me so I can understand the good?
If you’re going to give taxpayer money to a for-profit company, taxpayers should receive a share of the company in return. I generally don’t like 90% of the policies we’ve got going on right now, but I actually feel okay about this one.
> taxpayers should receive a share of the company in return
This is seductive logic but I think the opposite is true. The only time government should be giving money to a for-profit company is where a dividend in value is available that is not related to having a stake in the company.
Think about it this way: if the value transferred is fully realised as shares in the company then the government actually transferred nothing to the company. It was a pure commercial transaction and there is no obligation on the company to do anything different than it would have done commercially otherwise. Except the outcome is that the government is now entangled in private industry which is generally bad because it creates strong conflicts of interest in terms of policy and regulatory powers wielded by the government. All the dividend to taxpayers comes from the part that is not realised commercially.
Doesn't this create an incentive for the US Gov't to boost Intel and harm their competitors? That seems not great to me from a competition & healthy markets standpoint.
The problem is more severe. Previously the US government was passing laws (such as the CHIPS act) and then enforcing/executing them.
Now it is just doing whatever it wants.
This is only good for a very small sub-set of people, everyone else is worse off.
What competitors?
In the rare conditions where this has been necessary in the past, US companies have been given clear terms for regaining control of those shares. I'm not seeing any buyback provisions.
This is ignoring the original agreement of profit-sharing with the government as was in Biden’s original plan. Feeling “okay” or not “okay” is irrelevant until we know how well Intel does in the next decade and calculate the cost against the profit sharing agreement.
Yeah, I haven’t dug into the numbers to know. Which option makes more money for the government (and therefore the taxpayer, sort of) - a profit sharing agreement, or a share of the company (which, as with all publicly traded companies, is a profit sharing agreement that sometimes happens through dividends, and sometimes happens through stock sales).
Who cares about the money recovery, the actual concern is about getting the production up and running. This doesn’t really address that in any capacity.
True. I’d probably prefer to see the money go to a better performing company, but since there are like, 2 companies in the US that actually make semiconductors, there isn’t much other than starting a whole new company. Which, for $10B isn’t possible in this industry. So if the money is going to go to Intel, I at least want a cut of it, is my point.
We already got a “cut of it”. This is just redefining the “cut” we get is my point. Either way though you probably won’t ever hear the results of the cut. To get value from this cut the government would have to sell shares worth much more than they are now. You said something about a better company?
Smart bomb supply chain secured.
Forgive me...how is this different than taxes?
And wouldn't it be better to oh, I don't know, enforce the standard corporate tax rate?
Corruption is worse than taxes, because it's unfair. Now the government has an incentive to hurt AMD and free competition.
The distorts incentives and destroys the free market.
This is a bailout; it's the opposite of taxes.
Isn't it the opposite of a bailout, given that the US gov't is seizing an ownership stake retroactively based on past grants/bailouts but giving no new money at this time?
The CHIPS Act was the bailout; this is just replacing the previous profit sharing with equity.
It was very messy bailout then
CHIPS act is a grant similar to a small business grant, not a bailout at all. It was intended to incentivize chip production in the United States and was available to any company manufacturing in the united states. It had no equity strings attached, as authorized by congress.
Most of the money has already been given:
> The government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program. Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the U.S. Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.
So it kinda is something weird? It's not really a pure bail out, the Chips act already did that, and it's also not really a tax because they aren't going to get money out unless there's dividends. It's more like a power play which makes sense given that Trump is uncomfortable without anyone getting anything for nothing.
No No No.
Grant money is counted as income. It is thus taxed.
If this were really an investment it wouldn't have been taxed.
Forget the grant. The grant has nothing to do with what happened.
Intel's board of directors voted to give 1/10 of the company away and thus devalued your shares.
It's not like taxes because they are just making up the rules as they go along.
America sovereign wealth fund.
A lot of people are commenting on this without reading the actual content of the deal, which is spelled out in Intel's press release: https://www.intc.com/news-events/press-releases/detail/1748/...
A government stake gives confidence in the company’s survival that a one-time cash dump for the CHIPS act couldn’t.
It’s not a lot different than what car and financial companies got in 2009. They were about to go under because no one thought they’d be around long enough to get out from under and deliver goods or pay their debts. The government stake enabled them to keep operating and eventually recover and then the government returned the stake to the market (or will soon w/ Fannie & Freddie).
At least in 2008 there was a financial crisis. This feels like somebody has stock in intel.
I am surprised there is so much talk about China. Can we just focus on our own business here in the US: fixing the roads, bridges, schools, cities, etc.? Let’s make America greater first!
I finally grok the Republican party. It's only socialism if it helps the poor. Government handouts to corporations and trade protectionism? Mainly helps the rich, so it's not socialism. Tax money spent on a special interest program? Again, if it mainly helps the rich (or their party's base), no problemo. They're the Kleptocracy Party.
So did they buy these stocks from Intel itself?
Does that dilute the share other intel stock owners have?
This stuff always confuses me.
The stocks were not bought. Intel's board literally voted to give 1/10 of the company to the American government. Any sort of other take is propaganda. The claim that the shares were in exchange for grant money is false. Grant money is free and requires no payback. Congress authorized grants, not equity investments.
It's a way around the "horrible horrible" CHIPS act.
The U.S owns 10% of Intel now? What does that make us... $20 richer?
Today we are all nana... against our will.
Looks like they will get common shares (not preferred). Could Intel create a new share class for this investment (with different voting rights)? Does 10% give the government a controlling interest?
The hammer is right here, now where did I put that sickle?
For a party who talks constantly about freedom, this administration is sure doing a lot to encroach on said freedom, of both individuals and corporations.
Well, it's certainly newsworthy. Bizarre.
I am expecting shareholders to be very upset. If, as Matt Levine likes to say, everything is securities fraud then this is going to court one way or another.
Is the US going to sanction Intel for being a SOE now?
if you're the US government, this makes sense. invest into your own chip maker.
So, this happened just because one man (you know the one) decided it should happen? No vote or anything?
That is my understanding. The US king ”made a deal” with Intel.
Did Lip Bu Tan initially try to say no to this? You'd kind of expect him to say no. Is that why Trump tried to oust him? Is Trump trying to oust him the reason Intel are now accepting this?
> You'd kind of expect him to say no.
There was no guarantee Intel would get the rest of the CHIPS money they were granted - even the Biden administration kept holding it back (after officially awarding it to them) - as there were doubts Intel could deliver.
I also wonder if some deal was made around 14A. Tan said he would not develop it without commitments from customers, because sales from Intel CPUs wouldn't justify the cost. This may be a way to ease that pressure and give Intel another chance even without serious customer commitment.
The investment from Softbank is interesting because ARM is also a portfolio company of theirs. ARM has said they want to make their own chips now so Intel might be a good candidate for that.
Поздравляю с окончанием школы !!!!
Five nodes in four years coming right up.
No board seat or governance rights. What's the government getting out of this? Trump brags of a good deal? Might profit in the future? Or _actually_ although technically there's no governance, government might actually influence how Intel is run?
Besides politics and image, are there any benefits?
Seizing the means of production!
Da, Comrade!
The oligarchs resulting from the fall of Soviet Trumpistan are going to be the most obscenely rich people history has ever seen.
They already are, in a replay of the robber baron era.
Well, the current administration and the National Socialists do have some things in common.
> Of the total, $5.7 billion of the government funds will come from grants under the CHIPS Act that had been awarded
Also > "Your CHIPs Act is a horrible, horrible thing...You should get rid of the CHIP act and whatever's left over Mr. Speaker" - Donald Trump
Fast forward to today: > "This is a great Deal for America and, also, a great Deal for INTEL." - Donald Trump
Here comes the nationalization phase of fascism. Well done, freedom lovers. You voted in exactly what you fear most.
They never feared it, they always wanted it, just with someone like Trump calling the shots. Every accusation is a confession, etc.
this is a step away from capitalism and it harms any startups destined to compete with Intel and discourages investment in the startup ecosystem that might compete with Intel, and punishes investors/customers in/of any of Intel's competitors.
Atlas Shrugged ...
Comrade Trump seizing the means of production, glory to our leader
Ahh, yes, conservatives please lecture me about the utopia of the free market and how those evil socialists that take control of the means of production just screw it all up.
Number 6934 on my list of "every accusation is just projection".
Didn’t the US invade Iran when they did this to their oil industry? (Yes I know 10% is different to 100%, but wow… I thought the US shun commandeering of private companies?)
Discussion from yesterday about Intel's and Trump's woes
https://news.ycombinator.com/item?id=44978356
Unless the descriptions of the deal I've seen are wrong, this seems random and pointless. No new money. A lot of the support for Intel foundry, and a lot of the people in that are gone now. So what's the national strategic interest in Intel? Pat Gelsinger must be happy he didn't stick around for this shitshow.
Intel as a store of value?
Comrades,
Starting today, under the government’s guidance, Intel shall serve the needs of the needs of the nation - not the whims of oligarchs.
Liberated from wasteful and destructive capitalistic competition, Intel’s revolutionary “people’s processors” (soon to be developed) will ensure that the world’s most advanced AI chips are made in America. And priced within the reach of every US worker.
Viva la revolution! Viva Intel!
i remember when this happened during an actual crisis, in 2008, republicans all over cried on the radio day after day, arguing that it's socialiasm.
But now, crickets!!
They were still complaining about Solyndra over a decade later.
The Republican party of 2008 bears little resemblance to the one of 2025, especially on economic issues. Many in the party have changed their views over the last decade+ on industrial policy and the libertarian wing of the party has very little influence now. It's really a striking shift.
What remains of the "old guard" is, in fact, loudly complaining about this move:
https://www.nationalreview.com/2025/08/the-government-should...
For me as a vague 1920s maybe-the-SocDems, I see this as vaguely positive. A return to pragmatism from market dogmatism.
I see some of the tariff stuff and the US protectionism sort of the same way, although I don't approve, since I think the US uniquely benefits from this kind of thing due to that the dollar is such a predominant reserve currency and since I think it's badly done and will backfire, tarring what in principle be sensible policies if carefully targeted with being Trumpist.
This seems more vaguely 1930s maybe-some-other-ism.
Exactly! I know there's a lot of Trumpers/MAGAs on HN, so I'm sincerely asking them: How is this not the evil thing you guys constantly lecture us about (socialism!)?
It's not the evil thing because it's "their side" doing it.
Because they only lecture about socialism as a red herring. They only care about power and obtaining it. Fascists have no actual principles other than more power and hatred of others.
I am a republican. I even voted for trump. I am categorically against this. In fact, he should be impeached for it, and I have already called my representative (a democrat) telling her she has my vote if she introduces articles of impeachment against him. This is a red line for me. My parents left a third world country to not have to deal with this shit.
My first thought, how many Trump people just front ran this?
You mean did insider trading?
yes :) ,i got the terms mixed up.
Probably enough to lead to meaningful indictments and convictions, which will never happen.
No you didn't, front running is a specific form of insider trading and you used the term correctly :)
As of last week: https://bsky.app/profile/unusualwhales.bsky.social/post/3lwf...
Capitalism with Chinese characteristics
How an anti communist govt slowly is adapting communistic ideas !!
I give you 3 months before the US government takes 10% of Google, Microsoft, Amazon/AWS, Nvidia, AMD and Apple.
For Nvidia this is already happening. They're taking a chunk of the profits of Nvidia operations in China. The Chinese have been prescient when stopped any Intel and Nvidia chips in government and strategic areas of China.
Those companies are not fighting for survival.
The gov already took a big part of Nvidia profits in China.
Survival is not the issue, it is about control. Today 10% Intel stake (non-voting, bought with already-promised CHIPS funds) puts the state on the cap table, and the 15% skim on Nvidia and AMD China sales swaps export licenses for tribute. The HN usual knee-jerk downvotes on anything about Trump admin criticism, just help normalize it.
Any reason to think that Trump didn't just buy a bunch of options before demanding this?
> "The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars,” President Trump wrote"
This wasn't any sort of investment, it was blackmail. No corporation in the country would voluntarily give up 10% of the company to the federal government - for free - unless overtly threatened. The Trump administration is hoping that by exerting control over Intel, it can begin dictating conditions to Intel's customers, thus the tech community at large.
I also assume that one of Trump's cronies will take a spot on the board or some other oversight role, and in the near future, Intel will enrich Trump in one way or another, such as stock, investments, insider information, etc.
Nothing about this is good for the U.S. or Intel. It's not a bailout or a sign of support, but a way for Trump to have power over the tech sector.
> The Trump administration is hoping that by exerting control over Intel, it can begin dictating conditions to Intel's customers, thus the tech community at large.
This was my TDS-reaction as well. But, honestly, I feel like the "tech community" has moved on from Intel/x86 anyway. Or, at the very least, this move will accelerate that migration. ARM for the win!
And now we see Trump taking over the US economy! He will not stop there, of course. If Intel folded, other companies of "national interest" will follow suit and Trump will appoint his friends to each of them.
Arguably the alternative was the government just... not giving them the CHIPS Act money. (And there's certainly a point to be made that Trump altering the deal is... problematic.)
But I will say, I find the concept that when we invest public dollars in a private company, the public retains a stake appealing. I think about the strategic oil reserve, and how the government actually can make money by buying and selling oil to the open market. The idea that if we inject money into a company to help our domestic industries, that the government can sell it's stake back out at a later time is appealing.
(And again, to be clear, not a Republican or a Trumper here, and I assume in Trump fashion he will find some way to screw everyone involved and get paid himself personally... but the concept of the government acquiring a stake rather than just giving them a grant is on it's face... maybe not terrible?)
We haven't invested any public dollars into Intel, we just took 10% of it.
The US government is paying about $9B to Intel for this (on top of the $2B already paid).
I’m pretty sure that’s socialism
Socialism would be worker ownership.
This is simply state ownership of what's seen as a strategic business. It's an abandonment of market dogmatism, but not a step towards any of the many ideologies or positions where markets have a smaller role.
I think the phrase i heard before is State Capitalism. But i could be wrong
Yes. State capitalism is definitely the word.
Usually I suppose, when I think state capitalism I would think something like the Soviet Union, where this happens across many businesses with the state owning everything, but I suppose it is state capitalism, or a state capitalist element in a market system. One might even call it a mixed economy, or a sort of hacked-apart Swedish model without labour unions and state ownership of only certain strategic industries, rather than let's say, state ownership of hospitals.
nationalism
Unless it comes from the Commie region of Asia, it's just sparkling state capitalism.
This is one of the saddest days of my life.
I despite/abhor this administration and their politics, but this is a good move.
There should be more privatization where national interests are involved.
Instead of the ACA for example,the government could have taken a 51% stake in health insurers (forget subsidizing them, own them!) and we the voters would elect politicians to oversee health insurance instead of hoping and trusting CEOs.
So many problems are caused by companies chasing short-term shareholder satisfaction. If the government is a significant shareholder, then guess who they'll try to make happy?
The sheer threat of the government buying a controlling interest and running your company might make some companies behave in the interests of the public more. Especially, if the government is also engaging in policy to harm the company's revenue before buying stakes in it.
I'm not saying the US should be a full-on communist or socialist economy, nothing like that. This is capitalism. We the people get to use or tax dollars to our benefit. Think about it, the US sells bonds right? what if it paid for them by investing in company stocks and derivatives? that's revenue right?
The whole pearl-clutching over ideological extremes doesn't serve the public or the economy's interest.
Some privatization is good, none is great if everyone was decent and honorable. but in this society, moderate privatization where there is potential benefit to the public and national security makes sense.
Companies with government investment should also be prohibited from making political donations, so any company that is trying to sway elections faces the threat of the next administration buying stakes in them to prevent that behavior.
This could be the missing 5th estate that can make democracy last.
I swear Im not trying to be glib or dismissive, but I honestly think you dont know what "privatization" means, this is the exact opposite.
Exactly. This amounts to a partial nationalization of Intel.
Maybe they mean "privately owned by the government". Which I guess is usually called nationalization
I agree. He should take control of Tesla, OpenAI, Palantir and Facebook next. Then privatize some of the leading quantum computing companies. Why do we even need venture capital if we can just build out an Office of Strategic Investment and control everything from the federal government. \s
Why is this a surprise?
Who do you expect to design and make chips for national security-level programs in the future wars when Taiwan is a deep crater?
Every serious nation state has an arch design house and a fab. It need not be cutting edge (most militry stuff is a few gens old), but it needs to exist. Russia has Elbrus. China has Looonsoon and SMIC. Europe has ARM but is a bit behind here fab-wise. However, STMicro does have fabs in europe.
This is just securing access and control of national-security level resources.
Taiwan.
The thing is, even though the US is trying to create an alternative for itself, once Taiwan is in danger, this would for the EU mean a total US microchip monopoly, so radical action becomes necessary.
If I were a political leader in the EU I would consider nuclear weapons sharing with Taiwan if that happened.
The surprise is the federal government acting like an unfair negotiator, substantially altering the deal after it had already been struck. Equity in return for investment grants was never a part of CHIPS, and was only made part of it by Trump who seems to have originally wanted to kill the deal because it wasn't made by him.
I've lived long enough to see the Republicans become the socialist party
It's also pretty nationalist.
Ironic that Trump looks to be succeeding in killing both Democracy and Capitalism, which rightly or wrongly are seen as it's greatest strengths.
If they go what does it leave the US with that's any different from any other country?
Trying to ignore the politicking on this so it can be clear on what exactly is “happening”.
As far as I understand, all Trump did was alter Biden admin’s original plan. Trump swapped a 10% stake in Intel for Biden’s profit sharing for participating in the grants[0] (anyone who participates in the CHIPS Act gets this deal currently, I guess Intel is renegotiating). Not necessarily better or worse because Intel is a long ways away from any sort of gain that would make a difference.
If you feel conflicted to think this is a good or bad move, you’re right where Trump wants you. Sit down and do the napkin math, you may find the deal irrelevant or numbers similar. In the end we won’t know for a decade the result. The move is meaningless financially but generates headlines and doesn’t do anything to advance the actual foundries.
It’s almost distracting…
[0] “Biden to require chips companies winning subsidies to share excess profits“ >> https://www.reuters.com/technology/us-require-companies-winn...
First, this is different because this was not what was agreed when Intel sought the grant. So I reserve the right to see as ‘bad’ a coercive action.
Second, from your article:
‘ Commerce expects "upside sharing will only be material in instances where the project significantly exceeds its projected cash flows or returns, and will not exceed 75% of the recipient’s direct funding award." 'NOT A FREE HANDOUT'
Democratic Senator Jack Reed praised the profit sharing plan, saying chips funding is "not a free handout for multi-billion dollar tech companies.... There is no downside for companies that participate because they only have to share a portion of future profits if they do exceedingly well."’
Clearly, there was a cap on repayments, but there is not one on giving away equity
I don’t think people are conflicted over the math. The nature of this, the manner in which it went down, and the implications for the future are what people seem to care much more about.
Good luck, Trumpistan people.
Yet another bailout from the US government as accurately predicted. [0]
[0] https://news.ycombinator.com/item?id=44676641
So Intel is an SOE now?
Good. It's very much a "Heartbreaking: The Worst Person You Know Just Made a Great Point" situation.
If Taiwan's NDF has ownership share in TSMC and UMC, China's CICIIF in SMIC, Japan's Master Trust in a majority of enterprises, and Abu Dhabi's Mubadala in GlobalFoundries, then we should as well.
The recent (50ish years) aversion to Industrial Policy in America has been pigheaded and ideological to a certain extent. If we wish to build capacity domestically, especially in high capex and low margins industry, some amount of government support is needed.
Funds that are overwhelmingly sourced via private capital cannot take the same risks to build an ecosystem that a Soverign Development Fund can. This is what the Master Trust (Japan), NDF (Taiwan), and Temasek (Singapore) did to build their own domestic industries in semiconductors and REE processing - industries with high capex, high IP barriers, and low margins.
This now sets the precedent to develop at sovereign development fund.
If we did this with GM and Solyndra a decade+ ago we would have been in a better position to protect our automotive and renewable industry, but ofc the GOP of that era along with a portion of the DNC was not ready to take such a risk.
The CHIPS and IRA acts were steps in the right direction, but couldn't really take full advantage of the stick.
Edit: Surprised that a forum that largely supports single payer healthcare opposes sovereign development funds, even though they themselves could help enforce pricing in a less complex manner than that which the CMS does today.
At some point this is just reflexive hatred.
Would you still be saying this if Intel wasn’t floundering as badly as it is today? There’s no equivalent push to take any level of control in AMD.
Also this appears to be in exchange for CHIPS funds (per the article). HN has universally supported equity in return for bailouts over the years.
> Would you still be saying this if Intel wasn’t floundering as badly as it is today
Yes.
I've been a proponent of a Temasek style model for the US since my undergrad days. This would make it easier to commercialize grant funded IP instead of the mess that SBIR/STTR is today.
It was difficult for the Biden admin to do something similar, but at least the traditional norms have been shattered.
As I said above, it's very much a "broken clock is right twice" type of situation.
> Also this appears to be in exchange for CHIPS funds (per the article). HN has universally supported equity in return for bailouts over the years.
Exactly!
And like I have said a couple of times on HN - I view the CHIPS and IRA as the carrot, and tariffs plus ownership stakes as the stick.
There is nothing wrong with with a public-private industrial policy. We ourselves used one until the 1980s with Reaganomics, as did our allies like Japan, Taiwan, Singapore, Israel, Ireland, and others.
What if the government demands they start paying dividends?
I don’t know, it sounds like the US gov’t just stole $11 bln from Intel shareholders - while intel is failing - while promising nothing?
It's a similar amount to the stake from the CHIPS act.
And?
And fundamentally, I believe that any industrial stimulus should come with a mixture of government ownership as well as claw-back provisions should interests contravene national security.
Edit: cannot reply to you.
This deal literally comes with claw-back provisions.
and does any of that seem to have anything to do with the current deal, or align with current legislation?
Or is it just a transparent shakedown?
The government support should have come in the form of a real competitor. Intel got this way because they had no competition - nobody thought a domestic EULV manufacturer would be an American prerogative in 20 years. All the customers for dense silicon were fine importing it from Taiwan.
Pouring more money into a proven dumpster fire won't put out the fire. This is the protectionist just-desert of refusing to regulate the top-dog competitors into a position where they're afraid to rest on their laurels. If we want an American lithography powerhouse, buying Intel stock rewards exactly the wrong incentives.
What’s your suggested remedy?
So tell me your plan that would create a competitor for Intel from scratch that could be making decent chips in 5 years? 10 years?