Washington – 10% stake in the Trump administration at Intel, it was announced for a long time that President Trump had called the CEO of the chip maker to resign, being equally criticized by conservatives and some economic policy experts, which reduce the free enterprise free from such extensive government intervention.
White House National Economic Council director Kevin Haset may have given up those misunderstandings, Telling CNBC Although Intel is a “very, very special” situation, that “not in this industry, if not in this industry, there will be more transactions in other industries.” The possibility of America who got bets in additional American companies was immediately criticized.
Adam Posen, president of the Peterson Foundation for International Economics, immediately responded to Haset’s comment, posting on X, “Are you joking to me? We are going to the animal farm field in 1984 at this point,” George orwell satirical novel criticalism. “Did anyone vote for this?
Daniel de Martino, a partner of the Right-Off-Center Manhattan Institute, predicted that if this happens, America will look at more chronism, with the result that “companies will underporce the underperform because they know they will be granted bail,” and “the taxpayers will lose billions.”
Regarding the Intel Agreement, Conservative Talk Show Host Eric Ericason said, “You cannot be against socialism, when the Left does so,” Conservative Talk Show Host Eric Ericson said about the Intel agreement. “If you are not completely against socialism, then guess that you are going to get socialism. So if you support socialism, obviously Donald Trump is your boy.”
Why did America invest in Intel?
Mr. Trump says that he wants to increase chip production in the US and reduce the country’s dependence on chips made abroad. He believes that investment in Intel will help America in a better position to maintain its technical lead in China. artificial intelligence Race. But the US had already invested through Biden-era in Intel Chips and science actAnd Mr. Trump and his top administration officials said that the US government has been given returns on their investment.
White House press secretary Karolin Lewit said on Thursday that the US is taking a stake “To ensure that the United States is making our country rich again and some of these deals are benefiting from.”
“We should get an equity stake for our money,” Commerce Secretary Howard Lutnik told CNBC. “So we will distribute the money, which was already committed under the Biden administration. We will get equity in return.”
But Intel has been struggling – not only for a few years, but for decades, Scott Linnasicom, a leading economic and business policy specialist who has been the vice -president at the Libeterian Cato Institute and has criticized the Intel Deal.
Intel Prosperous In the 1990s and early 2000s, when most individual computers rely on the company’s processors. After the arrival of the 2007 iPhone, the emergence of contestants such as AMD -friendly AMD and Intel’s failure was closed to the chipmaker.
And now, as Nvidia and AMD Y for Dominance in AI Chip race, Intel Has lagged behind.
“Even if you feel that the government should invest in companies, Intel is not a lean, meaning, innovation machine,” Linsicom said.
The company lost another $ 19 billion last year and another $ 3.7 billion in the first six months of this year, making the company plan to reduce its workforce by 25% by the end of the year. The company said the administration invested $ 8.9 billion in Intel Common Stock as Intel, because of the government’s confidence in the role “expanding the domestic semiconductor industry”.
The Biden administration originally stated that Intel was to meet some benchmarks to get the taxpayer’s money, but Mr. Trump removed the goals to buy a stake in Intel.
Partial government ownership crisis
Economic policy experts are afraid that American stake in Intel will open the door for political pressure and chronism.
Intel warns Federal filing This week of this week “may have immediate reaction from investors, employees, customers, suppliers, other businesses or commercial partners, foreign governments or competitors over time.”
Lincicome says that Intel was capable of receiving a government infusion of cash on the strength of its operation, but because it is the best lobist. And this will only lead more companies for investment in the same way, he said.
“This is generally one of the problems with the winners and losers who choose the government in the industrial policy,” Lincicom said.
He underlined his concerns in an op-ed Washington Post This week.
“As its biggest shareholder with the US government, Intel will have to face constant pressure to align corporate decisions with the goals of whichever political party is in power.” “Will Intel will be detected or will be continued-like its long-relieved ‘megafab’ in Ohio on the basis of economic efficiency or government priorities? Will it fare and fare on the basis of merit or political connection?”
Lincicome is not the only analyst, who stated that uncomfortable decision -making CEOs can get into conflict with American characteristics if the country holds a stake in its companies.
Michael Strain, director of the Economic Policy Study at the American Enterprise Institute, said, “There are major risks for these companies, while accepting what the Trump administration is planning for any future investment is yet to be clear.” Many things that companies need to be competitive in the market, are required to be competed in the market, are politically discouraged, “like these companies,” like these companies. ” It is going to be very difficult to engage if the President feels that he will create a political vulnerability for him. ”
Companies will feel pressure without American investment, also, D. Martino said. A company that requires semiconductor chips can decide to buy from Intel as it does not want to lose government contracts.
The Trump administration has shown a desire to use industrial policy in other ways that depart from free market economic principles that have long preferred conservatives and corporate America. Most especially, Mr. Trump’s aggressive – and sometimes Punitive -Terif use, which he has stated that the country’s trade will reduce the deficit, revive American manufacturing and generate federal revenue, hears the mercanilism of the past, and contradicts with lousse-fair ideas that shaped the American economy.
How is America paying for Intel stake?
Most of the cash for the stake is coming from the biden-era chips and science act, which aims to promote the competition of the US in the Chip industry.
Intel has already received $ 2.2 billion from the Chips Act, and is on track to get an injection of another $ 5.7 billion from the law. A separate federal program gave Intel $ 11.1 billion to $ 3.2 billion for a total of $ 11.1 billion, according to A Release from IntelIntel and the federal government say the ownership will be inactive, and has not stated how long the US intends to capture its stake, although there is a provision for the government to expand its stake.
How has Intel plan to use American investment
The chip manufacturer says that he is planning to use funds to modernize the size of American sites in Arizona and other places to expand his chip.
Haset has defended American stake, Discussionly For the process of partial ownership of Intel as “very, very special circumstances” due to the funds provided by the Chips Act. When asked about the US bar to get equity bets in companies, Haset told CNBC, “If we are adding fundamental values ​​to your business, I think it is appropriate for Donald Trump to think about American people.”
Strain said that a government stake in American companies also pose a major risk for taxpayers.
“It is also going to earn for the loss of American people, as you are going to see a lot of good taxpayers’ money pursuing poor investment because the government is not going to remove itself quickly or easily from these arrangements, and generally, the countries going down this route have increased productivity at a slow productivity, there is a slow growth in living standards, and companies said.
Last American bets in big banks and vehicle manufacturers
One reason is uncomfortable with the government’s share of economists in Intel stems, which can send about the American economy. The most prominent modern example of similar American investment occurred during the 2008 financial crisis, when the US beat $ 700 billion in a large bank bailout and two out of the big three American vehicle manufacturers over $ 17 billion. This was done because banks were considered “very big in failing” and millions of jobs could be spent by the possible collapse of auto companies.
Experts are now questioning the intelligence of buying a stake in a company when the economy is not in crisis.
Lincicome stated that the administration is sending a contradictory message by highlighting the struggle, China is with its economy, while at the same time saying “we want to be more like China” by including more among the federal government in American companies.
“There is no crisis, of course there is no war, so it’s a big break that we have done earlier,” Lincicom said.
Although economists and politicians are different on the success of General Motors and Chrysler Bellout, Lincicom said there was undoubtedly a crisis. The federal government had taken ownership bets between two vehicle manufacturers to stabilize them, but within a few years companies sold bets when companies were financially financially.
Not socialism, but perhaps a step in that direction?
While the partial ownership of Intel or other companies is not at all socialism, Di Martino stated that it “exactly” stains the lines between the private sector and the public sector.
“Socialism and free enterprises are not a switch, they are a continuation,” Di Martino said, adding partial ownership of American companies “will definitely be a step towards socialism, there is no doubt about this.”
Di Martino said the US ownership stake in Intel “definitely finds us close [to socialism] And makes us less rich. ,
“I think the right way to describe it is a step towards state capitalism,” Strain said. “I don’t think I will describe it as socialism.”
Lutnik kept it in such a way: “Intel agreed to give us 10% of his company, which was definitely, the price of $ 11 billion.”
“So, this is not socialism,” he said at the Trump Cabinet meeting on Tuesday. “This is capitalism.”
Di Martino is suspicious about whether this is true. He said, “We are going to lead a way in the capital markets, which are going to lead the incapable,” he said, “and it is going to transfer capital from other companies.”
