The U.S. government is considering taking equity stakes in semiconductor companies in exchange for cash grants provided under the CHIPS Act. The move aims to boost domestic chip production and reduce reliance on foreign manufacturers. Craig Lutnick, a senior government official, supports this approach as it would ensure taxpayer money is effectively invested in the semiconductor industry.
Sam Bessent, an influential industry strategist, also backs the initiative, particularly investments in Intel Corporation to stabilize U.S. chip production. The proposal involves taking non-voting equity stakes, meaning the government would not control company operations but would benefit from financial returns if the companies perform well. Intel is at the forefront of discussions.
An illustration from August 19, 2025, shows an Intel processor alongside the U.S. flag, symbolizing the importance of domestic chip manufacturing. This potential strategy is part of broader efforts by U.S. policymakers to strengthen the nation’s technological infrastructure and secure supply chains amid global semiconductor shortages. The CHIPS Act, which stands for Creating Helpful Incentives to Produce Semiconductors, was established to provide significant federal investments in the semiconductor industry.
Discussions on equity stakes are ongoing, with no final decisions made. However, industry experts believe such a move could provide necessary funding to boost the semiconductor sector while offering a return on investment to taxpayers. The idea of federal government investments in public corporation stock still lingers, but history suggests there are significant pitfalls for the United States.
Steven Feldstein and Jodi Vittori of the Carnegie Endowment for International Peace highlighted potential risks, stating, “Considering the Trump administration’s self-dealing and erosion of accountability, there is an acute risk that the U.S. sovereign wealth fund could become a source of graft to reward Trump’s friends, coerce political support for his priorities and bring personal enrichment.”
The concept of federal investment in public companies has never found lasting favor on Capitol Hill due to numerous economic, political, and philosophical issues. A fund with the authority to purchase corporate stock would become one of the largest and most potent market investors. This raises conflicts of interest, such as the government being a major shareholder in a company it might prosecute for criminal activity, or its financial interests conflicting with its social goals.
Government stakes in semiconductor firms
The federal government taking an equity stake in a public company isn’t unprecedented. In 2009, the Obama administration acquired a 60.8% ownership of General Motors in exchange for nearly $50 billion in bailout funds.
They also acquired a smaller stake in Chrysler, subsequently sold to Fiat. These bailouts were emergency measures to prevent the auto industry’s collapse and were intended to be temporary. The government subsequently sold the last of its GM holdings in 2013, reporting a direct loss of about $10.5 billion, but the initiative was credited with saving up to 1.9 million jobs.
Trump’s proposed Intel investment differs significantly from past government interventions. A $10-billion stake would translate to about 10% of Intel’s shares, making the government the largest shareholder. Lutnick claimed the government wouldn’t exercise voting rights or engage in governance.
However, there was no mention of a time-limited ownership, or what corporate policies the Trump administration would support. Trump has publicly called for the resignation of Intel CEO Lip-Bu Tan over alleged connections to China. Unlike the auto industry in 2009, Intel doesn’t appear to be on the brink of collapse, nor would its potential failure have as severe an impact on the U.S. economy.
Despite Intel’s historical significance, it has faced strategic missteps, particularly in missing out on the artificial intelligence investment boom. The company has not publicly commented on the White House’s interest in an equity stake, leaving its investors uncertain. Shares of Intel saw a brief 7% rise when news of the potential investment broke but have since declined.
The idea of the federal government taking ownership stakes in public corporations continues to be fraught with challenges and risks, raising questions about governance, conflict of interest, and the potential for politicization.