Trump’s 10% Intel Deal is a Bailout in the form of State Capitalism

Over the past week, Intel announced that it would hand over a nearly 10% stake (worth approximately $8.9 billion) to the U.S. government. This isn’t a controlling stake and carries no voting rights, but it effectively makes Washington one of Intel’s largest shareholders. The money came from unspent CHIPS Act funds and Secure Enclave allocations that were supposed to be grants. Instead, they’ve been converted into equity, making the government a partial owner rather than just a subsidizer. Intel stock popped 5–6% on the news, but that’s a short-term sugar high.

This is not nationalization. Nationalization means the government owns and directly controls the company (think Venezuela’s oil industry or U.S. railroads in wartime). Instead, this is state capitalism — where the state takes equity positions in private firms, usually in “strategic industries.” China’s sovereign funds do this all the time, and Singapore’s Temasek is built on this model. Now, the U.S. appears to be experimenting with the same playbook.

The problem is that Intel is bleeding cash. It lost $19B last year and is still trying to catch up with TSMC. Micron posted a $5.8 billion loss in 2023 and still carries approximately $13 billion in debt. GlobalFoundries ended 2024 with a $262M loss and just issued weak guidance for 2025. These aren’t healthy companies — they’re government-dependent, propped up with subsidies. A “10% state stake” model could easily be extended to all of them.

And here’s the cautionary precedent: China’s “Big Fund”. Since 2014, it has poured over $90B into chipmakers like SMIC and YMTC. Some money helped SMIC expand, but a lot was wasted. YMTC hit technical milestones (128-layer NAND) but suffered from 30–40% yield rates, layoffs, and canceled expansions. Tsinghua Unigroup outright collapsed despite billions in backing. On top of that, the fund itself was rocked by corruption scandals in 2022. Despite all that state money, China’s leading players remain years behind TSMC and Samsung.

The risks are obvious: this tilts competition against firms like AMD and Nvidia, injects politics into business decisions (fab locations, supply priorities), and encourages inefficiency. China has already shown what happens when the state plays investor: you get wasted capital, governance problems, and companies still trailing global leaders.

This deal isn’t smart industrial policy. It’s a bailout disguised as strategy, and it should be read as bearish for U.S. semiconductors: more politics, less efficiency, and proof that America’s chip champions can’t compete without government lifelines.