Why Trump needs US authorities stake in chipmaker Intel – DW – 08/21/2025 | EUROtoday

The White House has confirmed that the Trump administration is in talks with Intel about buying a stake of as much as 10% within the chipmaker.

“The president wants to put America’s needs first, both from a national security and economic perspective,” White House Press Secretary Karoline Leavitt confirmed on Tuesday after days of media hypothesis over a potential deal.

Although it might be uncommon for the US authorities to take a stake in such a big firm, it would align with President Donald Trump’s pattern of intervening within the free market throughout his second time period.

Chipmakers Nvidia and AMD just lately agreed to pay round 15% of their gross sales in China to the US authorities.

Another instance was the latest sale of US Steel to Japan’s Nippon Steel, a deal which gave the US authorities a so-called “golden share,” giving President Trump sweeping veto energy over US Steel’s company selections and the proper to nominate a board member.

There was additionally the announcement final month that the US authorities would turn out to be the most important shareholder within the US’s solely operational uncommon earths mine, owned by MP Materials.

More than an organization?

“The Trump administration is really taking a broad view of what is possible for US government interventions in the private sector and very much pushing the limit,” Geoffrey Gertz, senior fellow on the Center for a New American Security, instructed DW.

He describes the latest strikes as “unusual,” drawing a distinction between different administrations’ makes an attempt to stimulate whole sectors and Trump’s extra private, focused strategy.

“They’re cutting one-off deals with individual companies,” he mentioned. “That’s quite a different approach from setting industry-wide industrial policy standards or guidelines.”

Yet there’s loads of assist for Trump’s strategy, notably relating to sectors seen as strategically vital within the US’s ongoing rivalry with China, comparable to semiconductors and uncommon earths.

Sujai Shivakumar, director of the  Renewing American Innovation program on the Center for Strategic & International Studies in Washington, DC, says the worldwide semiconductor business will not be a “level-playing field” given the huge state assist offered in nations like China and elsewhere.

“Intel is more than just a company, and I think the decision to invest should be applauded,” he instructed DW.

“It’s time to understand that this kind of industrial policy is now the norm across advanced economies and that governments are providing this form of extensive support,” he mentioned. “If we hold to this myth of a purely pure market here in the US, it risks ceding the ground for one of the most strategic industries of the century.”

Meanwhile, Gertz says it isn’t “inherently wrong” for the authorities to spend money on Intel. “I do think there are strategic sectors, and there is a case for active industrial policy, again, particularly where there’s national security spillovers,” he mentioned.

The significance of chips

Both the Biden and Trump administrations shared the objective of boosting the US’s capability to construct superior chips, wanted for virtually each facet of the fashionable, high-tech business.

The Biden administration launched the CHIPS Act in 2022, laws that acquired bipartisan assist. The act earmarked substantial federal help and grants for corporations comparable to Intel, Taiwan Semiconductor Manufacturing Corporation (TSMC) and Samsung to spice up manufacturing on US soil.

Given that Samsung is from South Korea and TSMC is from Taiwan, Intel represents the obvious prospect when it comes to manufacturing inside the US.

However, the corporate has been beset by issues lately. It has struggled to compete with TSMC in manufacturing probably the most superior semiconductors for exterior purchasers and has additionally not captured a share of the marketplace for AI knowledge chips, dominated by Nvidia. Its revenues have been sluggish, and its share value has plunged.

Trump, who has been crucial of the CHIPS Act, known as for Intel CEO Lip-Bu Tan’s resignation earlier this month. However, after assembly with Tan, his strategy modified when the transfer to spend money on the corporate gathered steam.

Sujai Shivakumar says Intel is the one US-headquartered agency inside putting distance of regaining US dominance in superior chipmaking and believes the corporate’s potential justifies the US authorities stepping in.

“It needs commercial demand for its products to be viable, but it needs that viability to secure demand,” he mentioned. “So it’s stuck in this rut. And unless there’s a strong signal that it can actually find the traction to get out, it’s going to be spinning its wheels.”

Crony capitalism or a sensible industrial coverage?

Bloomberg studies that the deal might entail the US authorities taking an fairness stake in trade for a number of the grants awarded to Intel by the CHIPS Act.

United States Secretary of Commerce Howard Lutnick is negotiating on behalf of the US authorities. He instructed CNBC that the US ought to “benefit” from that association, saying “that is exactly Donald Trump’s perspective, which is: ‘why are we giving a company worth $100 billion this kind of money?'”

If the deal goes by, it’s prone to increase some considerations over the Trump administration’s more and more strong strategy to direct intervention in company America.

“There are risks of crony capitalism,” says Geoffrey Gertz. “You can get to a situation where you’re undermining competition, undermining long-term innovation by having a few favored companies who can frankly be a bit lazy because they know they are protected by the state.”

Sujai Shivakumar says the hot button is to stability real strategic considerations and market forces.

“It’s not that we should write a blank check,” he says. “We can’t leave everything up to the market. There needs to be some balance, a smart industrial policy that can help the company restore confidence among its customers, investors, and suppliers.”

Edited by: Ashutosh Pandey