Ask an American conservative what makes America great, and at least until about a week ago, they might have said that, among other virtues, it’s a country in which the government stays out of the business of getting into business.
Yes, there are exceptions – Fannie Mae and Amtrak come to mind – but their record of mismanagement and mediocrity would prove the conservative’s point. Other democratic countries have government-controlled champion enterprises, and some of them, like the Airbus consortium in Europe, sometimes do well. Yet the heavy hand of the state tends to lead to problems over time, including corruption, inefficiency and a reluctance to let bad companies fail.
The federal US government is becoming an equity shareholder in Intel.Credit: Bloomberg
But American conservatism under President Donald Trump is changing into something unrecognisable, at least to those of us (silly us!) who thought the movement had guiding principles beyond getting, wielding and abusing power. Umpteenth case in point: The federal government becoming an equity shareholder in Intel.
This month, Trump called for the resignation of Lip-Bu Tan, Intel’s new CEO, based on vague allegations that he had invested in Chinese technology companies that US officials say have links to China’s military. (Tan is a US citizen who was born in Malaysia and raised in Singapore.) Trump also decided to convert nearly $US9 billion in government funding promised to Intel under the 2022 CHIPS Act, a piece of industrial policy intended to boost the US semiconductor manufactures, into an equity stake.
“You know what? I think the United States should be given 10 per cent of Intel,” Trump says he told Tan in a White House meeting on Friday. Tan speedily agreed. On Monday, Trump boasted on social media that he would “make deals like that for our Country all day long”.
If a Democratic president did this to Tan or any other American CEO, Republicans would call it a political shakedown, an assault on capitalism, a loser for taxpayers. They’d be right. Intel, which had a $US500 billion market cap at the turn of the century, is now at $US107 billion. What’s to keep it from going lower and taking taxpayers down with it?
Intel CEO Lip-Bu Tan leaves the White House after meeting US President Donald Trump on August 11.Credit: Bloomberg
As for other arguments for investing in Intel — that it’s systemically important to the US economy (as the banks were in the 2008 financial crisis), that it’s vital for national security (as the critical minerals industry is today), that it’s a symbol of American industrial might (as, arguably, Boeing is) — none of them hold water. The ecosystem of American chipmakers, from Nvidia to Micron to Qualcomm, is thriving. With about 110,000 workers worldwide at the end of last year, Intel pales in comparison with the largest US companies. If Intel were to fail, or stagger along for years to come, it would simply join the long grey line of America’s corporate has-beens, from Sears to Chrysler to IBM to General Electric.
Instead, Intel is about to become something much worse: a precedent.
