If Taiwan's NDF has ownership share in TSMC and UMC, China's CICIIF in SMIC, Japan's Master Trust in a majority of enterprises, and Abu Dhabi's Mubadala in GlobalFoundries, then we should as well.
The recent (50ish years) aversion to Industrial Policy in America has been pigheaded and ideological to a certain extent. If we wish to build capacity domestically, especially in high capex and low margins industry, some amount of government support is needed.
Funds that are overwhelmingly sourced via private capital cannot take the same risks to build an ecosystem that a Soverign Development Fund can. This is what the Master Trust (Japan), NDF (Taiwan), and Temasek (Singapore) did to build their own domestic industries in semiconductors and REE processing - industries with high capex, high IP barriers, and low margins.
This now sets the precedent to develop at sovereign development fund.
If we did this with GM and Solyndra a decade+ ago we would have been in a better position to protect our automotive and renewable industry, but ofc the GOP of that era along with a portion of the DNC was not ready to take such a risk.
The CHIPS and IRA acts were steps in the right direction, but couldn't really take full advantage of the stick.
Edit: Surprised that a forum that largely supports single payer healthcare opposes sovereign development funds, even though they themselves could help enforce pricing in a less complex manner than that which the CMS does today.
At some point this is just reflexive hatred.
Edit: cannot reply to you.
This deal literally comes with claw-back provisions.
Or is it just a transparent shakedown?
Also this appears to be in exchange for CHIPS funds (per the article). HN has universally supported equity in return for bailouts over the years.
Yes.
I've been a proponent of a Temasek style model for the US since my undergrad days. This would make it easier to commercialize grant funded IP instead of the mess that SBIR/STTR is today.
It was difficult for the Biden admin to do something similar, but at least the traditional norms have been shattered.
As I said above, it's very much a "broken clock is right twice" type of situation.
> Also this appears to be in exchange for CHIPS funds (per the article). HN has universally supported equity in return for bailouts over the years.
Exactly!
And like I have said a couple of times on HN - I view the CHIPS and IRA as the carrot, and tariffs plus ownership stakes as the stick.
There is nothing wrong with with a public-private industrial policy. We ourselves used one until the 1980s with Reaganomics, as did our allies like Japan, Taiwan, Singapore, Israel, Ireland, and others.
Pouring more money into a proven dumpster fire won't put out the fire. This is the protectionist just-desert of refusing to regulate the top-dog competitors into a position where they're afraid to rest on their laurels. If we want an American lithography powerhouse, buying Intel stock rewards exactly the wrong incentives.
This wasn't any sort of investment, it was blackmail. No corporation in the country would voluntarily give up 10% of the company to the federal government - for free - unless overtly threatened. The Trump administration is hoping that by exerting control over Intel, it can begin dictating conditions to Intel's customers, thus the tech community at large.
I also assume that one of Trump's cronies will take a spot on the board or some other oversight role, and in the near future, Intel will enrich Trump in one way or another, such as stock, investments, insider information, etc.
Nothing about this is good for the U.S. or Intel. It's not a bailout or a sign of support, but a way for Trump to have power over the tech sector.
But I will say, I find the concept that when we invest public dollars in a private company, the public retains a stake appealing. I think about the strategic oil reserve, and how the government actually can make money by buying and selling oil to the open market. The idea that if we inject money into a company to help our domestic industries, that the government can sell it's stake back out at a later time is appealing.
(And again, to be clear, not a Republican or a Trumper here, and I assume in Trump fashion he will find some way to screw everyone involved and get paid himself personally... but the concept of the government acquiring a stake rather than just giving them a grant is on it's face... maybe not terrible?)
This was my TDS-reaction as well. But, honestly, I feel like the "tech community" has moved on from Intel/x86 anyway. Or, at the very least, this move will accelerate that migration. ARM for the win!
What rights does this refer to? Normal shareholder voting rights or something else?
My gut feeling is that this is the government effectively front running markets.
> President Trump wrote in a post on Truth Social. “This is a great Deal for America and, also, a great Deal for INTEL.”
The Art of the Deal is blindly pouring gasoline on a dumpster fire. It will be the greatest dumpster fire ever seen, I'll give them that, but I strongly doubt this will be a great outcome for anyone involved.
The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.
But now, crickets!!
What remains of the "old guard" is, in fact, loudly complaining about this move:
https://www.nationalreview.com/2025/08/the-government-should...
I see some of the tariff stuff and the US protectionism sort of the same way, although I don't approve, since I think the US uniquely benefits from this kind of thing due to that the dollar is such a predominant reserve currency and since I think it's badly done and will backfire, tarring what in principle be sensible policies if carefully targeted with being Trumpist.
https://newsroom.intel.com/corporate/intel-and-trump-adminis...
It is equivalent to a 10% dilution (shares issued for no extra cash).
> The existing claw-back and profit-sharing provisions associated with the government’s previously dispersed $2.2 billion grant to Intel under the CHIPS Act will be eliminated to create permanency of capital as the company advances its U.S. investment plans.
How does Govt picking winners and losers going to help?
Intel is no Too big to fail Bank. Why save Intel of all chip manufacturers? Wouldnt it be like 25 years too late, with Intel and its heydays !?
Would Govt now ensure parity by investing in "marquee" entities across different industrial domains?
By ensuring that the US retains at least the ability to manufacture second tier CPUs vs complete reliance on Asia? This doesn't seem unreasonable.
But if all of our advanced weaponry used chips from Taiwan or Korea, for example, then the strategic implications for war in East Asia would be radically different. People are right to say that China could engage in war over Taiwan for chips, but for the wrong reasons. It's not that they want access to the fabs (they'd love it, but they're not stupid and they know the fabs and know-how would be destroyed in the war), but it would deny the US defense industry access to those fabs.
If US missiles use chips from TSMC, and TSMC is in occupied territory or a war zone... the US can't make more missiles. And no matter how powerful your starting position is, you can't wage war without the ability to replenish your stockpiles. It's the bitter lesson Germany learned in both world wars.
China wants hegemony in Asia, and to remove the influence of the US, Japan, and their allies within what they perceive as their exclusive sphere of influence. How to achieve that? Invade Taiwan, which eliminates western access to TSMC one way or another, effectively blockading western defense industry from the core things they need to resupply their militaries in a war. Like WW1 all over again, a "preemptive war" becomes the game-theoretic optimal outcome, and the world suffers.
How to counter that? The US and its allies need to make sure they have access to chip fabrication facilities that can produce near-state-of-the-art chips, even at inflated prices that are not commercially viable in peacetime, as well as the necessary strategic minerals like germanium and lithium. Only then does calculus swing the other way in favor of peace. Hence Biden's effort to get TSMC to build SOTA fabs in Arizona, and when that failed/stumbled, this investment in Intel.
It's a terrible idea
AMD no longer has a fab. TSMC dominates the global market and basically has no competition.
In the event that Taiwan is invaded, the US would suddenly have a huge problem getting access to any kind of high end chips, be they CPUs or GPUs. This would be a major problem economically and militarily for the US.
Some caveats: Due to the chip act, TSMC does now have fabs Arizona, though I'm not sure what their capacity is. TI, and some others building lower end components also have fabs I believe. For x86, high end ARM, and GPU's, virtually all of that is manufactured by TSMC right now, mostly in Taiwan.
180,000 wafers a year. Globally they do 17 million. They announced first profit yesterday.
It's the only chip manufacturer "left" in the US. The argument is national security: the US expects China to invade Taiwan and this will kill TSMC in the process.
Whether this will happen or not can be debated, but this is what the government expects.
Global Foundries, Micron, and Texas Instruments all come to mind
As a software engineer, this isn't an entirely new concept.
Um.
All that stuff is still semiconductors, just with different patterns printed on them.
Would it though? The TSMC foundries are pretty much in every continent. Are they just going to stop operating if this happens? Because that seems akin to killing a golden goose.
Also what is up with Global Foundries? I don’t hear a peep about them.
With Intel maintained, if China invades Taiwan and takes TSMC the US will still be able to make usable processors. They won't be the latest and greatest like TSMC, but they will be good enough. Maybe not the most powerful or efficient, but still rather close.
My only worry is this will mean management will start resting on their laurels and things will just continue to deteriorate. Or maybe the government can convince them to get rid of the bad management and start thinking more long term and less about immediate profits.
I think if this was a domestic thing it would be all kinds of dumb and wrong. But as a US National Security thing, it makes sense if you’re of the mind that significant intervention is fine when it’s in your country’s best interest.
The next phase is watching the U.S. government keep Intel on a palliative drip of softball contracts and tax dollars. I guess there’s a fair argument that this form of bail out could help Intel thrive again… or at least secure a domestic supply of chips for natsec reasons?
wtf? what do you mean, they're like less than 1 year behind TSMC when it comes to leading node
And wouldn't it be better to oh, I don't know, enforce the standard corporate tax rate?
> The government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program. Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the U.S. Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.
So it kinda is something weird? It's not really a pure bail out, the Chips act already did that, and it's also not really a tax because they aren't going to get money out unless there's dividends. It's more like a power play which makes sense given that Trump is uncomfortable without anyone getting anything for nothing.
The distorts incentives and destroys the free market.
1. Workforce Education & Training
U.S. gap: Advanced chipmaking requires a very specialized workforce — technicians trained to operate photolithography tools, engineers skilled in process integration, and managers with deep fab experience. The U.S. produces excellent electrical engineers and computer scientists, but relatively few people trained specifically for semiconductor manufacturing at scale. Community colleges and vocational schools have not traditionally fed into fabs the way they do in Taiwan.
Taiwan’s strength: For decades, Taiwan has aligned university and technical school curricula directly with TSMC’s needs. Institutions like National Chiao Tung University and National Tsing Hua University produce graduates who can immediately step into fab roles. Taiwan also has a culture where semiconductor careers are prestigious, stable, and desirable.
2. Ecosystem & Supply Chain
U.S.: While the U.S. leads in chip design (Nvidia, AMD, Qualcomm, Apple), much of the supply chain for advanced manufacturing is offshore — from photoresists and specialty gases to packaging and testing. Intel often must import equipment and materials.
Taiwan: Over decades, Taiwan built an integrated semiconductor ecosystem around TSMC — suppliers, logistics, packaging, testing, and maintenance are all tightly clustered. This means faster problem-solving and tighter coordination. It is not all just TSMC.
3. Culture of Execution
U.S.: Intel has struggled in recent years with execution delays (10nm and 7nm slippages). U.S. corporate culture often prioritizes shareholder value, short-term margins, and quarterly results. US needs to structurally modify securities and tax laws to become competitive.
Taiwan: TSMC operates with military discipline and long-term state support. It enjoys strong government-industry alignment, and the company reinvests heavily in R&D and fab expansion rather than prioritizing dividends.
4. Government-Industry Model
U.S.: The CHIPS Act and now direct equity stakes (as noted with Intel) show a shift, but historically U.S. industrial policy has been hands-off, letting markets decide. That left manufacturing hollowed out while design thrived.
Taiwan: Since the 1970s, Taiwan’s government has treated semiconductors as a national security industry, creating ITRI (Industrial Technology Research Institute), seeding TSMC, and continuously subsidizing expansion.
5. Workforce Retention & Lifestyle
U.S.: Many young engineers prefer careers in software, finance, or startups, which are perceived as more lucrative and flexible than 24/7 fab operations.
Taiwan: Working for TSMC is akin to a civil service career — long hours are the norm, but it is prestigious, stable, and tied into national pride.
If it involves (a) identifying / filtering stuff they want to spy on (b) sending it back to one of the intelligence agencies, it seems like both would be hard to do well and secretly ... right?
There should be more privatization where national interests are involved.
Instead of the ACA for example,the government could have taken a 51% stake in health insurers (forget subsidizing them, own them!) and we the voters would elect politicians to oversee health insurance instead of hoping and trusting CEOs.
So many problems are caused by companies chasing short-term shareholder satisfaction. If the government is a significant shareholder, then guess who they'll try to make happy?
The sheer threat of the government buying a controlling interest and running your company might make some companies behave in the interests of the public more. Especially, if the government is also engaging in policy to harm the company's revenue before buying stakes in it.
I'm not saying the US should be a full-on communist or socialist economy, nothing like that. This is capitalism. We the people get to use or tax dollars to our benefit. Think about it, the US sells bonds right? what if it paid for them by investing in company stocks and derivatives? that's revenue right?
The whole pearl-clutching over ideological extremes doesn't serve the public or the economy's interest.
Some privatization is good, none is great if everyone was decent and honorable. but in this society, moderate privatization where there is potential benefit to the public and national security makes sense.
Companies with government investment should also be prohibited from making political donations, so any company that is trying to sway elections faces the threat of the next administration buying stakes in them to prevent that behavior.
This could be the missing 5th estate that can make democracy last.
> The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars
I don't understand. Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant. Samsung, TSMC, Micron and others were granted similar funds without any kind of withholding or demands for equity from the federal government.
This stock can later be sold, to benefit the taxpayer.
When I buy stocks at market price, the company gets none of my money.
When the company issues new stocks and sells them, the company gets the money.
Win win for Trump.
Sure, but Intel's new CEO is making a lot of noise that indicates that Intel is maybe not going to be able/willing to build some-to-many of the things the CHIPS money paid for.
Giving FedGov a 10% stake in the company [0] is better than taking the money back for nonperformance, wouldn't you say?
[0] Which -as I understand it- was the sort of thing that was done for those finance companies that were Too Big To Fail when all that fraud^W novel financial engineering eventually caught up to them.
> Depends on who you ask. Trump himself seems to think the US is getting 10% for free.
So far...
And it makes sense that Intel is spinning it as a generous investment from the gov't, but the gov't is spinning it as a free gift from Intel. Neither account really paints the full picture, but each one paints themselves as coming out ahead.
Everyone saves face.
Not sure how anyone can believe anything that was agreed will hold in such an environment. :P
Intel got money via grants from the chip act and via other governments. Part of the reason they got that money was to help them build the chip fans in the USA and funding research and workforce in other nations. The fact Intel has claimed its slowing construction basically is a full 180° spin and will set them back in manufacturing ability.
Previous CEO strategy was focused on heavy investment in catching up on manufacturing ability. But once you get stuck on a node it becomes expensive to catch up.
New CEO is clearly trying to shed weight. They have let go of a significant % of workforce, stopped certain projects all together, and seem to be basically selling off parts of their technology and assets to keep cashflow positive.
Given the current CEO and his history and connections, plus the US government involvement it looks like a rocky situation.
They made a deal that existing CHIPS act grants and some additional grants would now come with stock when before stock wasn't part of the deal, so I guess it's kinda like the US got them for "free"?
>The government will purchase the 433.3 million shares with funding from the $5.7 billion in unpaid CHIPS Act grants and $3.2 billion awarded to Intel for the Secure Enclave program.
So the same playbook hes taken across the board: cast aspersions on leadership, withhold duly appropriated money in contravention to the law. Rinse repeat.
[0]: https://www.reuters.com/business/trump-says-intel-has-agreed...
This is simply state ownership of what's seen as a strategic business. It's an abandonment of market dogmatism, but not a step towards any of the many ideologies or positions where markets have a smaller role.
Usually I suppose, when I think state capitalism I would think something like the Soviet Union, where this happens across many businesses with the state owning everything, but I suppose it is state capitalism, or a state capitalist element in a market system. One might even call it a mixed economy, or a sort of hacked-apart Swedish model without labour unions and state ownership of only certain strategic industries, rather than let's say, state ownership of hospitals.
Who do you expect to design and make chips for national security-level programs in the future wars when Taiwan is a deep crater?
Every serious nation state has an arch design house and a fab. It need not be cutting edge (most militry stuff is a few gens old), but it needs to exist. Russia has Elbrus. China has Looonsoon and SMIC. Europe has ARM but is a bit behind here fab-wise. However, STMicro does have fabs in europe.
This is just securing access and control of national-security level resources.
The thing is, even though the US is trying to create an alternative for itself, once Taiwan is in danger, this would for the EU mean a total US microchip monopoly, so radical action becomes necessary.
If I were a political leader in the EU I would consider nuclear weapons sharing with Taiwan if that happened.
This is seductive logic but I think the opposite is true. The only time government should be giving money to a for-profit company is where a dividend in value is available that is not related to having a stake in the company.
Think about it this way: if the value transferred is fully realised as shares in the company then the government actually transferred nothing to the company. It was a pure commercial transaction and there is no obligation on the company to do anything different than it would have done commercially otherwise. Except the outcome is that the government is now entangled in private industry which is generally bad because it creates strong conflicts of interest in terms of policy and regulatory powers wielded by the government. All the dividend to taxpayers comes from the part that is not realised commercially.
Also > "Your CHIPs Act is a horrible, horrible thing...You should get rid of the CHIP act and whatever's left over Mr. Speaker" - Donald Trump
Fast forward to today: > "This is a great Deal for America and, also, a great Deal for INTEL." - Donald Trump
Starting today, under the government’s guidance, Intel shall serve the needs of the needs of the nation - not the whims of oligarchs.
Liberated from destructive capitalistic competition, Intel’s revolutionary “people’s processors” (soon to be developed) will ensure that the world’s most advanced chips are made in America. And priced within the reach of every US worker.
Viva la revolution! Viva Intel!
Private ownership was the adults main point of pride to distinguish from the Chinese when I was growing up.
And now the Chinese private property frameworks are closer to ours and ours are closer to theirs.
I suspect you were growing up when this was in full swing already.
Which is what the last CEO was in the middle of doing and he got fired just recently because they couldn't stomach it
Some examples: VOC, BBC, national airlines, etc.
List across countries: https://en.wikipedia.org/wiki/List_of_government-owned_compa...
US specific: https://en.wikipedia.org/wiki/State-owned_enterprises_of_the...
VOC: 1602 through 1800 https://en.wikipedia.org/wiki/Dutch_East_India_Company
Taking an ownership stake in broad daylight for political favors is very much unprecedented in the modern economy.
I wonder how the markets will react, will stocks go up because people will assume Intel's going to be a government mandated champion or will they go down because of the negative connotations government control brings?
A more interesting question is whether that voterbase's idea of what they were voting for does or doesn't line up with what they got.
(Also, pet peeve: "it's lead" should be "it's led".)
There was no guarantee Intel would get the rest of the CHIPS money they were granted - even the Biden administration kept holding it back (after officially awarding it to them) - as there were doubts Intel could deliver.
I also wonder if some deal was made around 14A. Tan said he would not develop it without commitments from customers, because sales from Intel CPUs wouldn't justify the cost. This may be a way to ease that pressure and give Intel another chance even without serious customer commitment.
I guess this is kind of like an auto or bank bailout, but is there something to bail out, or are they just gaining ownership of a doomed (in the classical sense) corporation?
Number 6934 on my list of "every accusation is just projection".
As far as I understand, all Trump did was alter Biden admin’s original plan. Trump swapped a 10% stake in Intel for Biden’s profit sharing for participating in the grants[0] (anyone who participates in the CHIPS Act gets this deal currently, I guess Intel is renegotiating). Not necessarily better or worse because Intel is a long ways away from any sort of gain that would make a difference.
If you feel conflicted to think this is a good or bad move, you’re right where Trump wants you. Sit down and do the napkin math, you may find the deal irrelevant or numbers similar. In the end we won’t know for a decade the result. The move is meaningless financially but generates headlines and doesn’t do anything to advance the actual foundries.
It’s almost distracting…
[0] “Biden to require chips companies winning subsidies to share excess profits“ >> https://www.reuters.com/technology/us-require-companies-winn...
Second, from your article:
‘ Commerce expects "upside sharing will only be material in instances where the project significantly exceeds its projected cash flows or returns, and will not exceed 75% of the recipient’s direct funding award." 'NOT A FREE HANDOUT'
Democratic Senator Jack Reed praised the profit sharing plan, saying chips funding is "not a free handout for multi-billion dollar tech companies.... There is no downside for companies that participate because they only have to share a portion of future profits if they do exceedingly well."’
Clearly, there was a cap on repayments, but there is not one on giving away equity
They always getcha with the fine print.
Speaking of things that wouldn’t surprise me, if Intel can’t manage an about-face in the next three to six years I fully expect them to become a Nationalized enterprise if only to preserve fabrication and chip design capabilities domestically. Same with Boeing given their less-than-stellar track record of late.
The current conflict is over domestic manufacturing capabilities. That’s where it will continue to rage until and unless full-fledged war breaks out. It doesn’t matter how many chips are designed domestically if all production capacity is in Asia within China’s sphere of influence. Intel is a major outlier for chips, as is Boeing for aerospace.
If they go what does it leave the US with that's any different from any other country?
Who else is next?
On the other hand, I wish it were a more formalized process rather than this politicized "our president made a deal to save america!" / "Intel is back and the government is investing BUY INTEL SHARES" media event. These things should follow a strict set of rules and processes so investors and companies know what to expect. These kind of deals should be boring, not a media event.
> Of the total, $5.7 billion of the government funds will come from grants under the CHIPS Act that had been awarded but not paid, and $3.2 billion will come from separate government awards under a program to make secure chips
Interesting accounting there. I guess the government was threatening to void the grants or something? Why would Intel donate shares for grants already approved?
I guess this nets out to a stock issuance with no downward price pressure, so still not a bad trade for Intel if they thought those grants were worth nothing.
Besides politics and image, are there any benefits?
Coffeewine•1h ago
alephnerd•1h ago