Yves here. It is remarkable how Trump seems to need to have his name in the hot lights, um, the headlines, all the time and is able to do so. Admittedly, liking bold gestures for their own sake, as opposed to whether they make any sense, helps by giving way more degrees of freedom. As more experts weigh in on Trump’s extraction of equity from Intel, they are confirming our hot take that this holding was if anything a negative for Intel. And by not improving Intel’s prospects (its problems are strategic and operational, not financial), the government has made itself arguably responsible for how Intel fares going forward.
Below, William Lazonick and Matt Hopkins react to the Intel “deal” and conclude it amounts to flashy optics, incoherent strategy, and a creeping politicization of economic policy. And mind you, they make clear that they don’t oppose to government investment in key industries as a way to implement industrial policy. But Trump’s flailing about to show his power is not even remotely that.
By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website
Intel, once dominant in semiconductors, has flailed amid manufacturing problems, leadership changes, and fierce global competition. And unfortunately, it matters because in a world where chips are the new oil, controlling them means controlling power — economic, military, and geopolitical.
As the company stumbles through global tech wars and Washington photo ops, two economists deeply familiar with the company suggest that the latest CEO shake-up and Trump’s government share deal may have less to do with industrial policy and more to do with political theater dressed up as strategy. In conversations with the Institute for New Economic Thinking, William Lazonick, a prominent critic of stock buybacks, and his colleague Matt Hopkins express skepticism over what Hopkins describes as Trump’s “shotgun” approach to the economy and his erratic decision-making.
“It’s pretty clear to us that [Pat] Gelsinger was pushed out because he became the face of Biden’s CHIPS Act push,” Lazonick said. “Intel’s big investment and turnaround strategy was supposed to cost $100 billion. Unfortunately, Intel had already wasted $145 billion on stock buybacks over the previous two decades. The $8 or $9 billion from the government was just a fraction of the total investment required, but it was still important.”
The whole point of CHIPS Act funding was to put Intel back in the front lines as a manufacturing leader in advanced chips, the kind that power AI, smartphones, and national security. “The big challenge was catching up with TSMC and Samsung – developing the industrial capabilities necessary for advanced chips, microprocessors for smartphones, AI, that kind of thing,” Lazonick said. “It’s going to be hard no matter what. If Intel doesn’t do that, the U.S. essentially loses domestic capacity in those areas.”
While TSMC and Samsung have built plants on U.S. soil, Lazonick cautioned that “it’s not the same as having a strong American-owned player.” In his view, domestic control matters, particularly when geopolitical risks are involved. “TSMC already took a big geopolitical risk cutting off Huawei in 2020, and that showed how fragile those supply chains are,” he noted. “But here’s the problem: the U.S. government doesn’t really have a structure for aligning corporate and national interests.”
Lazonick observed that Trump’s latest maneuver, snagging a 10% government stake in Intel using already-allocated CHIPS Act funds, looks more like a headline grab than a power move, noting that “while the government has 10% of the shares, there’s no taxpayer representative on the board – and frankly, who would want one put there by Trump?” Meanwhile, he noted, “hedge fund activists, for instance, can buy 1–2% of shares, and they can line up institutional investors, pressure companies into buybacks, and accomplish other items on their agenda.”
In short, “if Trump’s aim was leverage, this isn’t it. It feels more like a symbolic gesture, a PR move. There’s no coherent policy behind it.”
Hopkins added that “if we want to save American semiconductor manufacturing, the shareholding doesn’t necessarily have anything to do with that.”
And it could be worse than useless. “If I were an Intel shareholder, I’d be pissed,” Lazonick said. “Suddenly there are 10% more shares in circulation, which dilutes your stake. Yes, the stock price went up, but that’s just speculative. Fundamentally, shareholders are now getting less for each share.”
So who benefits? “He [Trump] gets to spin it as a win, like he’s doing something for American industry,” said Lazonick. “But in reality, it’s performative. Shareholders lose. There’s no clear industrial strategy. And it creates more uncertainty for Intel’s leadership.”
That lack of strategy, Lazonick argued, is the real issue. “In theory, there could be [an upside] if this were part of a broader plan — if the government said, ‘We’re going to help Intel succeed, invest more if needed, and take a stake to give taxpayers upside’ — that could be viable. But there’s no consistency. No policy. Just Trump winging it.”
Hopkins also expressed concern that the government’s shareholding, while framed as a national security investment, lacks a clear strategy or accountability: taxpayers could profit if Intel rebounds, but they could also lose big if shares are dumped at a loss or the company goes bankrupt. He draws a cautionary parallel to Tesla’s 2010 DOE loan, which helped avert bankruptcy and bring the Model S to market. When Tesla repaid the loan early in 2013, the government’s warrants to buy Tesla shares were cancelled. The option to get shares of Tesla, had it been exercised, could have yielded taxpayers hundreds of millions, or today, tens of billions. Hopkins warned that Intel’s deal offers no clear upside for taxpayers—and worse, a similar option to purchase more Intel shares included in the deal is contingent on Intel giving up majority control of its foundry, arguably undermining the very intent of the CHIPS Act.
Hopkins cited the 2009 General Motors bailout as a cautionary tale: “The government stepped in, provided a bailout, and took an equity stake in GM. But once the company began to recover, Wall Street — the same voices that had mocked GM as ‘Government Motors’ — urged the government to sell its shares. And they did, at a loss. Taxpayers ended up losing $11 billion. At the very least, we could have held onto the shares until we broke even.”
If anything, the latest Intel move signals déjà vu: “There’s no policy that says, ‘Here’s how we build capacity, retain talent, and ensure national competitiveness,’” Lazonick said. “It’s all short-term politics.”
The deeper risk is that short-term politics dictate Intel’s future. “The risk is that Trump’s involvement introduces chaos,” Lazonick said. “Gelsinger was building trust with government, emphasizing the national security role. Now, Intel’s in limbo — the board’s reacting to politics, not strategy.”
He noted that despite purchasing the most advanced EUV machines from ASML, Intel still faces a long road ahead. “It takes years to ramp up, train staff, and reduce defects. It’s not plug-and-play,” he said. “And if they don’t invest aggressively now, they fall even further behind.”
So does Trump’s move help? “Almost certainly not”, Lazonick said. “If you’re making investment decisions based on what pleases Trump rather than what’s good for long-term competitiveness, you’re heading in the wrong direction.”
Hopkins added that “with Trump pushing chaotic tariff policies and demanding Lisa Cook’s removal from the Fed, we’re seeing a politicization of economic policy that could further destabilize already fragile efforts to rebuild U.S. chipmaking.”
I have a basic question about the legality of the U.S. government owning stock in private corporations. I did several searches with DuckDuckGo, and I mainly got results related to Intel. Finally, some articles turned up about GM and Citibank during the 2008 financial disaster. At least one article pointed out that the move, buying stocks, was unprecedented.
Whenever things in the government are “unprecedented,” like giving tanks and all-terrain vehicles to police departments so as to intimated the locals, I am skeptical. The New Deal didn’t include buying stocks and trying to make good for shareholders. The New Deal accomplished economic reorganization through agencies and policy.
Is it possible to sue to prevent such deals by the Feds? Not that the liberals / Democrats will do so.
To wit: “If I were an Intel shareholder, I’d be pissed,” Lazonick said. “Suddenly there are 10% more shares in circulation, which dilutes your stake. Yes, the stock price went up, but that’s just speculative. Fundamentally, shareholders are now getting less for each share.”
Perfect liberal logic, of the sort that Richard Kline pointed to in his essay. Not exactly what I’d call new economic thinking — it’s Milton Friedman lite. And an indication why people are focused on Intel rather than on what should constitute industrial policy in the US of A.
Heck, maybe the U.S. of A. should bring back the Works Progress Administration.
PS: The U S of A is a loooong way from Andrew Jackson battling the Second Bank of the United States, indeed.
During WW2, USG substantially controlled the industrial economy, determining what would be made and where limited resources (physical things, not money) would go. The involvement was far more intrusive than common stock ownership with no board representation. This isn’t to defend or justify DJT, just to note that it’s a pretty small step in comparison to what was done in a genuine national emergency.
lmao at all the pearl clutching….
the USA owns 100% of Amtrak, the TVA, USPS (but USPS is constitutionally mandated).
ironically, there is no constitutional limit to ownership of private shares/nationalization–mainly because such an act was logistically unthinkable and kinda pointless in 1789.
>>>Is it possible to sue to prevent such deals by the Feds? sue in Delaware chancellery court for share dilution, but they’ll lose
You know, if Trump had gotten that 10% stake in Intel and made it a requirement that there be no more stock-buybacks and all profits were to go back into research & development, I would say bully for him. I know, I know – dream on Macduff.
Trump doesn’t do strategy. I recall we had rough consensus on that. Trump doesn’t do policy either.
Yves’ opening remark is important and makes me pause. “Trump seems to need to have his name in the hot lights, um, the headlines, all the time and is able to do so.” So let’s postulate that the motive for his choices is attention. All theater. All of it. Tariffs, deportation, war and peace, attacks on government and academia, all just theater the purpose of which is to consume as much aggregate global attention as possible.
Each of us has a limited supply of attention, we can attend to one thing at a time. A lot of what goes on in the world is directed towards making something the object of our attention. All manner of social, commercial, political behavior has exactly that goal. It might be possible through use of the methods in media studies to prove that Trump is the greatest attention grabber in history.
Everything Trump does is performative because he’s a performer.
The Ben Norton piece I linked yesterday talks about how China works. It’s a single party state but the bureaucrats rise through the system by first being in charge of a province and learning how to govern. The US used to be like that with many presidents first being governor of a state and of course that was true of FDR, our greatest modern president.
However in 2008 the Dems took the casting director approach by selecting the telegenic but highly inexperienced Obama to run and win. Trump then said to himself “I can do that” and darned if he didn’t win too. The Romans had bread and circuses to pacify the public while in our late imperial America the government itself is a circus although the bread, as a result, may be hard to come by (eventually). To an increasing degree, as a society, we seem to be hopelessly shallow. Other countries are stepping up to be the planetary adults in the room.
Here’s suggesting that people are taking Trump way too seriously although of course we have no choice since–crazily–he is leader of the nation. Many of us hope that, like the monkey with the typewriter, he will blunder into some policy masterpiece. Straws being grasped at?
Before Obama it was Reagan, former president of the Screen Actors Guild.
And Obama considered Reagan a role model in some ways.
Our problem now is we have a figurehead who actually thinks he is capable of running things. Reagan had people for that and even Nancy to give him advice.
Reagan used to be described as a former actor who became a politician. I’d argue he never stopped just reading the lines he was handed.
The whole election system was slowly turned into a reality show over the course of decades, and yet people still wonder how the reality show guy got to be president. Given the system we currently have, why should we expect anyone else?
President of SAG, and FBI informant.
Reagan had 8 years as governor of California. And “president of the Screen Actors Guild” would seem to make him something of a “labour leader”.
Hmmm, I can’t find circus or the bread. Does that mean I am not in the big club?
Paper straws?
efficiacy of the deal aside, the DC Dem. pearl clutching at the Intel deal shows a party out of ideas.
starve the beast and let the something, anything new rise from the carcass
Commerce Secretary Lutnick has also mentioned that the government may invest in Lockheed:
Trump Pentagon weighing equity stakes in defense contractors like Lockheed, says Lutnick https://www.cnbc.com/2025/08/26/trump-pentagon-equity-stakes-in-defense-contractors.html
But like William Lazonick, I don’t see how this changes the corporate performance of Intel or Lockheed (if similar stock buys are done there). And as others have pointed out above, this has no resemblance to how the American economy was controlled for WW2. I don’t think the American oligarchs that run the uniparty would ever allow that level of control ever again.
Interesting piece, offering more evidence that this deal isn’t good for intel. but I’m a bit skeptical of Lazonick‘s claim that the USG doesn’t really have a mechanism for aligning corporate and national interest.
There’s a prof who teaches at a uni near me named Stephen Maher, who has written extensively on this very topic. His book about General Electric says that the US is an integral state, where the complex of technical advisory boards, task forces and think tanks constitute the mechanisms through which elements of the state raise the political consciousness of the capitalists as a class.
I suppose that if he defines the national interest as being inclusive of everyone, then yes—it’s true that there is no structure for aligning national and corporate interest. But as the history of Silicon Valley shows, there is extensive state-civil coordination dating back decades, and it has been integral to the construction of a US-centered global economy.
Hopefully I don’t come across as needlessly pedantic, I just think this is an important distinction to make; especially when many center-left political economists take the democratic bonafides of liberal capitalist states at face value.
Indeed, I was reading up on Lazonick and came across this paper of his with the great economist mariana mazzucato, where to their credit they position workers and the state as distinct collectivities whose contributions to innovation are downplayed by corporations. However, they don’t see this dynamic as a class conscious division of labour between state and business, one that drives capitalist social relations predicated on extracting surplus value from workers.
Maher isn’t convinced that this alliance can be explained simply by corporate lobbying, where big business has hoodwinked the state. Instead, state bureaucracies have emerged and rationalized their own power in terms of their capacity to organize, preserve and extend US dominion over global capitalism; in his book he traces this from the Treasury, to the Commerce Department post WW2, and then State at the dawn of neoliberalism.
If we accept this general reading, it should make us very skeptical not only of Trumpian theatrics, but equally of “strategic” investment initiatives which prove to be pale imitations of an actual public investment authority. The CHIPS Act’s most notable concessions to progressives, like the inclusion of labour agreements, buyback restrictions, and investments in child care and other social infrastructure, were watered down to voluntary “preferential” criteria, with companies like Intel and TMSC now facing criticism for failing to uphold the (non-enforceable) social infrastructure provisions, environment, and local labour commitments they agreed to.
All this to say that setting Trump aside, we need to unpack the class character of “public investment”. Otherwise elites will just keep repeating what Mark Carney just did here in Canada, where he campaigned on renewed public investment, saying all the right things about nation building, sovereignty, and economic diversification. Turns out his office of major projects, which I thought might be an investment authority of sorts that builds public housing and infrastructure, is something closer to DOGE-lite. It centralizes regulatory authority while at the same time slashing the state’s capacity to evaluate projects and identify investment gaps, essentially further outsourcing investment planning to oil companies and Brookfield. All public departments and crown corporations like Via Rail are facing minimum 15% cuts, except for law enforcement. Are those savings going toward refurbishing bridges, enhancing food sovereignty, or building new roads and trains? No, apparently when Carney spoke of nation building, he meant slashing billions in social spending to buy expensive new toys for the military.
True.
Lack of investment: it’s almost as if they knew something terrible was going to happen.
While this move is about fabs, it doesn’t help Intel that its latest processor families have been duds. In the performance market I would say pretty much everyone is on AMD. That might not be super important to the broader market but I think it has a tendency to filter down as “mindshare”.
But then you also have ARM-based chips that also are a big threat to Intel.
All this discussion omits what I would think would be a very important example of government directing the national economy: the military industrial complex. The USG spends about a trillion dollars a year on efforts that are nominally within the defense sector, but are largely aligned with cutting-edge technologies that are important in a technological economy. In fact, it’s a truism now that anyone in the US with a new technical idea who can’t interest the private sector will pitch it as a national security technology and try to get USG money that way. It frequently works.
It doesn’t result in a good or coherent defense sector (as we have seen in the Ukraine war), and it’s not terribly efficient, but it does give the government substantial control over the center of gravity of technological spending in the United States.
Japan has (or used to have) MITI, which does more or less the same thing of directing and financing industrial policy, but without the fiction that it is defending the country militarily. I can’t help but think this straightforward approach is probably a lot better, but it requires a population that is willing to go along with it without having to be scared into it first.