In general I would rather the government take a stake in corporations they're bailing out. I think the "too big to fail" bailouts in the past should have come with more of a cost for the business, so on one hand I'm glad this is finally happening.
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.
I’d really rather we didn’t bail out these companies at all. It clearly creates moral hazard and makes it hard for better run companies to enter markets.
While that argument makes sense from a purely philosophical perspective, it doesn’t hold water in the reality of this situation.
Nobody is entering the chip making business and growing to a size and scale to compete with Intel in 2025. If they collapse tomorrow there aren’t going to be startups filling in the gaps, there’s just going to be massive shortages of chips and chaos.
...no? Did you see me say nobody would buy the assets in a scenario where Intel was actually going bankrupt?
I said if by some magic Intel ceased to exist tomorrow, there wouldn't be some startup just filling the gap. So the idea that government investment in Intel somehow prevents a startup competitor is just nonsense. To compete with Intel would require trillions in investment and probably a decade+ of time to build the requisite organization and talent.
The government investment to prevent the catastrophe that would result in them declaring bankruptcy and the subsequent breakup of their assets has no bearing on whether or not a startup could replace them.
If shareholders are losing ownership it's less a pure bailout and more a strategic investment and/or takeover. It also potentially lets the average taxpayer benefit rather than just those its directly propping up.
Here I thought the point of a grant/subsidy is that it allows companies to take risk - by setting up factories, funding research without worrying about the monetary cost etc.
Government benefits through one, generating employment - direct and indirect employment, raising taxes through personal taxes (indirectly impacting tax collection) or second the country being at the forefront of the innovation etc. That is how average tax payer was supposed to benefit.
But I guess trying to nationalize companies and "benefiting" from company profits was something people were missing. How did no one see that? Ah yes, third world countries try this routinely for "national security" and it always leads to moral hazard pointed out by the person above you.
> But I guess trying to nationalize companies and "benefiting" from company profits was something people were missing. How did no one see that? Ah yes, third world countries try this routinely for "national security" and it always leads to moral hazard pointed out by the person above you.
This isn't nationalizing it though, this is just an investment into it. Investments aren't bad.
Investments can be bad. The market efficiently destroys malallocated capital through competition.
The problem with government taking stakes in private companies is that it creates moral hazard. By taking ownership in Intel, the government has effectively "propped it up". This means that Intel competitors that made less risky decisions to remain solvent are now losing; their bet was Intel was operating poorly, and instead of capitalizing on Intel's downfall so they can fill the gap, the government has plugged the gap. This action distorts markets away from their competitive equilibrium. In the process it generates moral hazard and deadweight loss.
Investments by the government can make sense, but generally it makes the most sense when investments support public goods (arguably also when supporting goods/services that the private market would not). Cpus are neither.
Just like the SVB bailout, or Freddie/Fannie/Sallie establisments, this is bad.
Not that I agree with bail-outs, but 2008 financial crisis that resulted in a number of bail outs actually netted the treasury a profit.
> In total, U.S. government economic bailouts related to the 2008 financial crisis had federal outflows (expenditures, loans, and investments) of $633.6 billion and inflows (funds returned to the Treasury as interest, dividends, fees, or stock warrant repurchases) of $754.8 billion, for a net profit of $121 billion
Was going to say, gotta check first how long that money was tied up for the profits to really mean anything. How well would that investment have done vs index funds or gold? Or what if you adjusted all dollars for supply?
Was that profit diverted from companies that were better managed and didn't get a bailout? We can see who won. Who lost? And why is the government deciding winners and losers? Why especially when the government is one of those winners?
I think the government taking a stake creates additional moral hazard and invites corruption. The melding of corporate and government interests is a slope that is always slippery.
No, they did not. The government paid less than Softbank that also just purchased a stake. Unless forced, Intel could have likely gotten a better deal.
This has worked REALLY well in countries like India. Where it resulted in the ability to be badly run, AND be excluded from market pressure. Which resulted in corruption and a drag on the economy.
There are governments which can take a stake and be ok, and then there are governments which are setting up to set money on fire.
I see two objections to this: The collateral damage to the surrounding economy (well ran companies might be dependent on Intel) and the loss of strategically important institutions and knowledge, especially in markets with a high barrier to entry. So I think bailing out can be justified, even if it is a clear moral hazard. The better solution I think is to prevent markets from becoming too oligopolistic and firms from becoming too big to fail. But this would require a government who isn't afraid of taking anti-trust measures to maintain market competition, but the US has been moving away from that model for decades.
Well as much as you don't like it, companies this big failing is terrible for the economy and in this case, national security to a degree. I'm of the thinking that when your company gets to a certain size we'd be well off nationalizing. Apple has more money than some nation states. Something that huge has the potential to affect global politics. There's lots of other reasons too, but this isn't like letting the corner store fail. The repercussions are huge. If we're going to bail out, the people should own some of it.
When a company “fails” it does not disappear in a puff of smoke. It goes into bankruptcy and is sold in parts. Some of those parts are perfectly functioning divisions which will continue to function but they will be owned by someone else.
I would rather have Intel go bankrupt, sell profitable pieces to private buyers, and if there are any pieces that are not profitable but crucial to national interests, create a company out of them and have the government buy them. This way you are not propping up a dysfunctional behemoth.
Things must die in order for new better things to take their place. This applies to companies as well.
And Apple needs their chips fabbed, so why not have Apple invest $50B into Intel? Nvidia could afford to chip in too. These companies that face a huge amount of geopolitical risk because they've put all of their eggs in the TSMC basket should have to pay for this not US taxpayers.
You’re proposing that the United States government force Apple to invest in Intel? Apple chose a different supplier than Intel; at this point it’s hard to consider Intel a competitor to TSMC but let’s pretend they are.
You have proposed a “free market” system in which if you choose the wrong competitor you can be forced to bail out the chosen one. The economics of that don’t work at all.
The free market is great if there are no discontinuities. However, being a greedy algorithm it's not great about planning ahead for things like geopolitical risk - such as some of the largest, most profitable companies putting the bulk of advanced CPU and GPU production in Taiwan. As such, if we're going to make adjustments so that we do try to plan ahead for potential disruption we need to incentivize companies that need fabs to produce their advanced devices to invest in some domestic production so that we're not over a barrel if China decides to invade Taiwan. I'd rather have Apple, Nvidia, AMD, Broadcom, etc. make some investment and take some ownership in Intel than for the US government to do it. This is essentially what Craig Barrett has been proposing as well.
If TSMC diseaper tomorrow, people will still buy computers, with chips made from Korea, or China, who cares. What are apple or Nvidia risking? They have worked hard to lock their customer. The problem is for the US military.
Apple & Nvidia switching to, say, Samsung as their foundry would likely take at least a year before they'd start to see production. Meanwhile, little to no revenue. It is a risk for them. And if China went for Taiwan, why not also cause some trouble for S Korea while they're at it? (Wouldn't have to invade, just block shipping, etc. - if China decided to do maximal damage. It's also quite possible that N Korea would take advantage of the situation)
I think it would be shorter, they work with Samsung to evaluate their option. And if China did went after TSMC (Taiwan and us) plus Samsung, Nvidia can still switch supplier (Intel?). The risk (let's say one year revenu) isn't worth joining the fab business. They have seen what happened to Intel and AND. And they know China will have good fabs in not too long. Nvidia true competitor is apple, and they are in the same boat.
Indeed, it’s actually a horrific non-communist pro-capitalist version that leaves citizens much worse off - see “bailout socialism for the rich and rugged individualism for masses”.
> I'm of the thinking that when your company gets to a certain size we'd be well off nationalizing.
The public sector is great at two things: (1) getting literally millions of people to show up to work and do well-defined jobs (i.e. nothing outside the lines) that do not change from year to year, and (2) dumping billions into research, with very little of (2) affecting (1). Critically, the public sector has extraordinary difficulty with the agility needed for iterative product development.
If companies get to a certain size and their day-to-day operations are more-or-less fundamentally the same year-after-year, yeah there's an argument for nationalizing them. You see this in arguments to nationalize segments from oil refineries, apartment construction, and airlines. There's something coarse about caretaker CEOs and private shareholders getting rich, instead of the public purse, off the economic rents thrown off from a mature machine that doesn't have much more, if any, room for growth. But the key question is whether the potential for growth has been fully exploited or not; if it hasn't been, then the government certainly won't succeed at exploiting additional growth, and it's better for the company to stay in private hands, which will be motivated to privatize the wealth from achieving that growth, and the government will be paid more in taxes if they succeed.
That's why I'm not convinced chip manufacturing is there when there is still yearly research into reducing process sizes. Maybe there's a case for nationalizing the foundry lines producing older, larger processes that are used in current weapons designs, but that's not the case for nationalizing the whole company.
How is using tax money to prop up uncompetitive companies good for national security? Wouldn't it be better to replace them with competitive companies? It's super hard to be successful when your own government in backing the competition.
You can't build a new Intel. That would take decades. These aren't startups. They are massive fucking machines that can't just be disassembled and put back together by someone else. So the idea is to control them and get them back on track to better serve the collective interest.
You let them fail because that ensures that everyone else in the economy fixes their shit and stays competitive. America developed more world class successes, by getting out of the way and letting badly run firms fail.
Intel failed because the Taiwan government started tsmc and supported an amazing business model that turned out to be perfect for SC manufacturing.
Unfortunately, this is in a country that China is threatening to takeover while building the largest bomb shelters and field hospitals right across the strait.
China is forcing us to invest kind of like they are forced to prop up Huawei to make GPUs for deepseek. Conflict makes irrational actions happen.
You can't build a new one so you keep the old one on life support? This makes no sense. The old Intel is not the right choice. How many decades do you think it will take them to recover if you don't clean house? How many decades has it already been? The later you start the longer you remain vulnerable to foreign competition.
You wouldn’t have to build a new intel. Their IP, infrastructure, and even the individual talent pool won’t simply disappear. They can either get redistributed into more competent companies like their competitors or restructured into a new venture. The only losers would be the current shareholders.
Chip manufacturing is too important for the US. We can’t be completely dependent on Taiwan. Nothing against Taiwan, it’s one attack away from being obliterated by China.
No company is going to come out of someone’s garage and build a chip fab.
> We can definitely offer subsidies for manufacturing in the US
The very subsidies Intel now has to pay with shares for? How is that a subsidy? Companies now and in the future would be very concerned before taking any US subsidies because the terms can always change after the fact.
And it’s still owned by a foreign country and Taiwan is restricting TSMC from manufacturing their most advanced processors from being manufactured in the US.
Nvidia has a market cap of 4.5 trillion dollars and everyone is committing hundreds of billions to AI CapEx in their direction - they can afford to organise chip fabs if it really came to it. Ok TSMC and ASML would need to be on board but it could be done. Should be done in fact because even a simple SWOT analysis would show the risk to their business.
If Taiwan becomes practically inaccessible, is there any way another country can setup a competing fab (for the latest generation of chip sizes) without years of R&D? As far as I understand, the practical knowledge of how to do it doesn't exist right now. (Neither does the prerequisite tooling)
Given there’s fabs doing essentially the same thing elsewhere then yes. Getting down to 3nm and the technology and secrets that involves would take a while though.
TSMC can’t do it either without xUV lithography machines made by ASML in the Netherlands.
Furthermore there isn’t anything magical about about the current generation of chips that couldn’t be replicated at at a scale of 12 or 15 or 20 nanometers - it’s just that scaling down to that small allows for a greater density of transistors per wafer and thus increased power efficiency. An AI supercomputer could be built with chips with bigger transistors than 3nm it would just run hotter.
And investing in intel aside, one of Nvidias great competitive moats is CUDA and that’s software not hardware.
I meant specifically for a given small size. Sure larger ones can be and are produced elsewhere. But how many years behind is everyone else if they can't get any help at all from the current companies.
Then they'd have to use Samsung or Intel. Both are a bit behind TSMC, but the main issue is that TSMC has a massive amount of capacity so chips would become very, very expensive.
GPUs would go backwards a few generations for 5-10 years. Also supply shock on other industries would double the prices of chips for vehicles. Eg covid 3.0
I’d love this to be true but the tech involved is Sci-fi level stuff. Neutron beams used to chop off atomically perfect slices of giant silicon crystals and wacky stuff like that.
TBF garage fabs -are- a thing but it’s in the hundreds of nanometers scale. Thin film technology is also promising for low tech tape outs, but neither of those is going to be practical for anything better than 1980/90s tech. A modern die would be in the square meters range on those process densities, and could never achieve ghz speeds.
That said, there are a ton of scrappy companies sending out designs to 30-100nm scale fabs, companies with 5-10 employees cranking out cool designs and custom silicon… but they are still sending their tape-outs to giant companies to fab, just on their old, obsolete machines.
Silicon foundries are incredibly capital intensive, and short SOTA process lifespans burn through that investment at a frantic pace.
I think one of the people who got closest to that was Sam Zeloof.
He kind of had everything going: extremely clever and motivated, cooperation with his parents (who also worked in the industry), access to equipment. Kind of hard to improve on that.
He was able to replicate most of Intel's SOTA process... from 50 years ago. That's more than almost everyone else has managed in their garage but that's about the best you can expect without insane capex and ramp up (and again, it's not like he didn't have access to capital, it just wasn't monetary.) Even still it took five or so years to work everything out.
The SOTA today is really kind of insane. It's right at the frontier of what all of humanity is capable of. Of course as time goes on we'll push that out and today's SOTA is tomorrow's commodity but that won't change everyone's concern with being unable to replicate the contemporary best process.
The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
> The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
Right, this is why I think in-sourcing chip manufacture is totally viable (that is, if we were actually interested in that and not just using it as an excuse for corruption). The interesting exceptions I've heard about are things like, IIRC, high-power local AI for autonomous drones. But for SAMs and such, old tech will probably do it.
Sadly no. There isn't really a single person who understands the entire SOTA chip fabrication process in enough detail. Think thousands of material science PhDs with master and apprentice style relationships inserted at every level of a massive tech tree.
It's not like you can just look at the plans for a chip fab and copy/paste it into a new location and hire people to fill in who will have any idea how to work it.
It could be extremely lucrative if they get it right.
Simply trying to copy TSMC would also be a poor strategy.
Companies have "core competencies" (or should). The manufacture (not design) of high-end silicon has never been one for any of these companies except Intel, and they have just lost big time.
… but the shareholders are global?! That’s not really a compelling argument unless you made it a requirement that all major/strategic companies must have 100% domestic ownership!
BUT - all you then need to do is create a Delaware LLC that buys the strategic stock, which is owned by $SCARY_FOREIGNERS
Intel couldn’t because the science is too hard to do with the scale of only your own designs. Intel had to stop competing with their own designs and open up their fabs like tsmc.
There is no amount of scrappy cleverness that gets you from zero to manufacturing cutting-edge chips without shitloads of capital investment, years/decades of R&D, a huge manufacturing workforce, and big contracts.
There's no such thing as starting small and scaling in that business.
TSMC's estimated costs in 2020, were $12 billion for their first fab. In 2025, their updated estimates were $65 billion for the first three fabs and $165 billion for when they get to six such facilities. So, $8.9B is a lot of money, but isn't anywhere close to getting to the equivalent to what TSMC has in Taiwan.
> getting to the equivalent to what TSMC has in Taiwan
That wasn't the question. The question, at least for me, is can you build non-zero chip production, enough to start building out a sustainable business. Obviously you're not going to compete with TSMC on day one, but there's a wide spectrum between that and "garage".
How would you build a sustainable business based on old processes though? The only reason fabs exist that use old processes is because they were once new processes, and once they've been built you may as well keep them running for a while. Building a new 50 nm fab would never be viable.
Those old fabs are still able to be useful at all because most applications don't need cutting edge chips. Chips have been Good Enough for decades. And again, if the goal actually is manufacturing independence, buying local chips that are a bit more expensive is totally worth it.
Why is this so hard for people to understand? Intel for years had a massive lead in the market. Instead of investing in the business the clevel suite instead opted for idiotic stock buybacks.
The only good news is that C-level suite can continue to do the same shit over and over again.
The government took 79.9% of AIG in that bailout - which was the biggest of the "too big to fail" bailouts from the past. People seem to forget that the owners of these companies that were bailed out got almost completely wiped out and instead focus on management compensation (which famously stayed high).
One challenge with the government taking large ownership in private companies is that it creates an opportunity to offload the ownership later, and that offloading might happen during a different presidential administration from the one that acquired it, and the offloading process can also be an opportunity to enrich someone else.
One example that comes to mind is the current Fannie Freddie Mac.
That's an over simplification. AIG was bailed out. And it's investors were wiped out. But AIG owed a huge amount of money to banks and investment firms that had enormous benefit from the bail out. Those are the people who paid no price.
If a company has truly become too big to fail that it makes sense for the federal government to bail them out, then why are we even leaving the welfare of the company up to private industry in the first place? It's just asking for ways to siphon taxpayer money out of the government through their willingness to buy shares. It inflates the stock price because it shows that the government might buy more share in the future at market rate. Its operations should be required to be more transparency, since if they're large enough that their failure would dramatically impact the welfare of the whole country, their operations should be subject to more direct democratic will (at least, more direct than the many steps removed from what is happening to Intel).
Intel is public and their financials have indicated this would happen. Even at my most irrationally exuberant their stock buybacks didn’t make much sense.
I’m not sure what “more transparency would look like to you, but publicly traded companies with audited financials are quite transparent. As for the part about siphoning money, history has shown that taxpayers do well. In 2008, the US government took roughly 80% of AIG, sold off their stock by 2012, made a roughly $15 billion profit and AIG is no longer considered too big to fail. It worked and did what it was intended to do. There are reasons to be positive about this.
To be fair, a lower court ruled it “illegal exaction” but awarded $0 in damages as the illegal exaction prevented bankruptcy which would have zeroed out the investment anyways. Then the Federal Court of Appeals tossed that ruling as the plaintiffs did not have standing to pursue action.
There is no current ruling that the acquisition was illegal.
Maybe part of a bailout should be IP release for free to American companies. And the same would be true about a bailout of Boeing (for example). Make it easier for other companies to compete and eventually reduce the risk.
Maybe. I have worked in the corporate world for decades. My partner works in the government. My perspective is that the government office wastes so much time (and therefore $$) that I often have to keep my mouth shut to maintain peace in our relationship. There is no “disagree and commit” mentality. More like 9 months into a project and someone starts to feel “uncomfy” about something and we’re back to the drawing board.
I do believe the government is in a better position to provide services to the poor, but they are in no way going to be cheaper in the long run.
That being said, I do live in Seattle, which has a particularly “bogged down” government. Look up the “Seattle process” for some horror stories
The government is not 'bailing' Intel out. Intel's CPU business is profitable. Their manufacturing is not. America gave intel grants to build better manufacturing to secure America's national security interests. Congress did not authorize any acquisition of Intel shares.
All the talk about this from a business / investment side leaves out the simple fact that this is not actually authorized by anyone with the power to actually do such a thing.
Essentially, the government, elected by the public, voted to offer grants to intel, and then intel shareholders woke up today to find their equity had been diluted.
Are you sure congress didn’t authorize this ? i.e. actually specified that the money could only be used for grants and could not be used for equity purchases?
> The Department of Commerce is authorized to provide funding in various forms, including grants, cooperative agreements, loans, and loan guarantees, in exercising its Section 9902 authorities
AFAICT the relevant section of law says it is up to the Secretary of Commerce to determine the funding type to be used for the semiconductor financial assistance
It's not otherwise related to all this but a real bug bear of mine is that municipalities don't get part ownership - along with controlling rights for matters like sales or relocations - of sports teams when we subsidize their stadiums through taxes.
Organizations such as the NFL forbid it, only the Green Bay Packers are grandfathered in as an exception. Owners are encouraged to threaten moves. Collective action is needed to undo the race to the bottom.
No collective action is needed. They can just refuse to fund the stadium if they can't get a good deal for themselves on it. But maybe the people living there really want the stadium despite the risks, so in that case it's fine. They're getting what they want.
I think it would've been much better to incentivize the likes of Apple and Nvidia to make investments in Intel. They need to have their designs fabbed, they have a good amount of geopolitical risk. They also have a lot of money on hand. Didn't Apple say they were going to invest $600B into the US? (not that that's really going to happen), ok, so why not put $50B into Intel?
Their dragon’s hoard of cash is only being used for financial engineering.
Their finance team axed a meager $10B dollar investment to improve Siri thereby making Apple the laughing stock of the tech industry players who say they are working on AI.
Government shouldn't bail out anyone. Period. It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote. It is done all the time. That is what happened with the CHIPS Act.
The moment 10% stake was announced this became political. While the stated reason might be national security etc, in reality something else might be at play.
One, this government and its supporters have been talking about government "wasteful" spending. So, a stake shows that they got something in return for that public money. The money is now "well spent".
Second, it helps boost the political "dealmaker" image of POTUS and we all know how much he cares about his image.
Except if Intel goes there’s no leading chip manufacturer left. You can’t just (easily) tax cut your way to having that concentrated knowledge and market position.
It's like you intentionally chose the ignore other government actions and focus on taxes just to fit your narrative. Read it again:
> It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote.
And read the announcement again. Intel has not been given extra money. CHIPS Act money has been converted to stake. That means Intel wasn't going away, if that is your concern.
Government routinely provides grants or preferential treatments to certain sectors or industries. Like Tesla and the EV grant. That works fine. It doesn't mean government needs to acquire stake in Tesla and put their thumb on the market scale.
In case you miss it, let me repeat - industries needs to be supported. It is called CHIPS Act not Intel Act for a reason. Given the current POTUS propensity to hold aid/grant without a quid pro quo, we can guess what happened here. Intel doesn't gets the grant money unless they kiss the ring and polish POTUS' image.
“Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.”
I’d encourage you to “read again” the HN guidelines.
> Government shouldn't bail out anyone. Period. It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote.
If Intel is at risk of going under, saving it is what’s understood to be “bailing out.” A grant that’s meant to save a major multi-billion dollar company isn’t quite what most people think of as a grant.
"People" you are referring to want a level playing field. If the Chinese government is tilting the field, there aren't a lot of good options. You can either watch the Chinese subsidize draining most productive capacity from the rest of the world, erect trade barriers (my preference, but it would require cooperation with other countries, which... ain't gonna happen for a while now), or try to tilt back.
Are you unfamiliar with the concept of cornering a market? Sure, uber was offering lower prices subsidized by VCs until taxis were driven off. After the fact they raised prices back up. Or what Amazon did with diapers.com? It is not wise to let your geopolitical foe gut the productive capability of your economy. It’s how America took over dominance from the UK by taking over the high tech business of the day back then (textiles).
It’s fine for the consumer in the short term but a flawed long term strategy.
That’s like claiming that Amazon is a bad investment because they weren’t reliably profitable until 2015 and only had their first profitable year in 2003. The part you’d be missing is that they were reinvesting all their profits into the revenue growth machine. These past few years is actually the switchover point for Uber when growth seems to have leveled off more.
It’ll take them 7 years to make it back and keep generating for even longer. Whether or not self driving cars kills Uber will depend on how well or poorly they’ve diversified their business model.
But headwinds and risks are true of any business. You’re missing the larger point I’m making that investors and business people frequently do loss leading as a tactic to kill off competitors and once the competitors are gone they can milk the market. Whether or not it’s an effective strategy doesn’t matter - can companies are not coming back no matter what happens to Uber. Similarly, local industries that China kills won’t come back no matter what happens with China.
Also as a final nit - the data I’ve looked up suggests they only lost 16B since founding. This halves the payback time to a few years and then every year after that is many billions in profit.
Yeah sure but then you do it properly. Why did Trump have to coerce them into the deal (by threatening to fire the CEO)? Just imagine what's going on behind closed doors.
I don't even think thats a joke. Trump doesn't dislike cancel culture, he just wants to be the one doing the canceling. And credit scores? You are already half way there with the way the government is acting.
The government should avoid bailing out big, uncompetitive corporations. If the government is acting as lender-of-last-resort in some crisis, then it should demand senior debt to that it gets paid back before any shareholder.
I think it's a good choice for Intel as they are one of the very few who own fabs and fabs are extremely valuable pieces of equipment. Just because of 3 consecutive annual CPU "bugs" in essence, they should not shut down forever. Try try again.
The heavily criticized auto bailout was precisely this way and actually turned a profit once the government sold its stake. This is different and I can’t imagine the government will ever sell its stake.
I was wrong. The $80B TARP program lost quite a bit of money on GM. The program overall lost $9B while saving millions of jobs and stabilizing the economy.
But it still took a share in companies that participated in TARP which is why some payed back the loan instead of letting it convert into ownership shares if I recall correctly.
Government is starting to be to big to fail. Living in the Great Lakes region its just the reality of it, as the geopolitics of the region are outplayed by idiots in other parts of the state.
Bailouts aren't following some rules of fairness, they're for specific reasons like preventing greater economic problems (2008) or national security (probably Intel). You might disagree that those are the best ways to address those risks but that's why we elect the government to make those decisions and act on them instead of letting the country collapse - which is arguably more important than social services which won't really matter if there's no money to fund them or the country has been taken over by some hostile enemy.
Is like the country is not already collapsing due to lack of social services compared to the supposed enemy which already has higher lifespan while having 10x lower gdp per capita.
> Bailouts aren't following some rules of fairness
And people wonder why populism came back. Huge transfers of wealth aren't about 'fairness', its about preventing greater economic problems that the people who received the bailout say will happen if they don't get bailed out.
At the end of the day, this line of thought is going to fuck over the country far more than any depression would.
It's the same line of thought that says countries should subsidize local agriculture. The alternative would be greater specialization in food production and greater risks if those specialized countries fail to provide for their dependants. No doubt there's some influence of farmers trying to get wealth transferred to themselves but that doesn't mean it doesn't also benefit the rest of the population.
One big difference is management control. People feel that government administered services tend to have poor management and citizen services more often than not. One big example is the DMV since almost every has experience dealing with it, long queue times are almost universal because no one gives a crap and it's very hard to fire a government employee. Or the passport issuance, or applying for permits. Or unemployment benefits, the list goes on and on.
Imagine if the DMV and passport services had even the possibility of competition like a private company has. You bet all of a sudden the service would get much faster and better and with fewer mistakes and red tape with the same or fewer number of employees. Or someone would set up a competitor and imagine how many people would even pay extra just to not waste several hours of their time.
It's tax payer money so there is a lot more waste than even at big private companies. For example, the costs to just administer and operate the social security administration(not including any money paid out to recipients) is $15 billion dollars with a big B. There is no incentive for anyone to save the tax payer any money and there would be a huge pushback from govt contractors, unions and employeees. See how much hate DOGE gets for even proposing cuts or higher efficiencies.
Any large IT project in the government in almost any country and at any goverment costs huge amounts while not returning much value if any. Look at the state and costs of local metro stations and trains in almost any city.
That's interesting example to choose, as I've actually heard often that the Social Security administration is an example of an efficient government administration.
> The program, called the Disability Case Processing System, or DCPS, was designed to improve case processing and enhance customer service. But six years and $288 million later the program has “delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns
For the main system they're still using COBOL, which has no Date data type, causing issues even in 2025.
Well, my local DMV is much more efficient and friendly than the private health insurance company I have to deal with.
But part of that is lack of competition. I can't really switch to a different insurance company, because the one I am with is heavily subsidized by my employer.
I switched away from AT&T. You even keep your number. Switching govt services not an option unless you take more extreme measures.
> USPS has also been great overall
USPS is an independent agency which is funded by its own fees charged to users, not taxpayer money. It's not like the other agencies.
From Wiki:
> The USPS is often mistaken for a state-owned enterprise or government-owned corporation (e.g., Amtrak) because it operates much like a business
It's also far from a monopoly unlike most other govt agencies and has competition in the form of UPS, Fedex, DHL, Amazon etc.
So it's not surprising that it runs better, if it loses user fees, it directly affects the bottomline and thus would have to downsize, no blank check from the taxpayer like other agencies have.
> I switched away from AT&T. You even keep your number. Switching govt services not an option unless you take more extreme measures.
I can vote for a politician to fix the government services. And the local politicians know that keeping the government running well enough is needed to be re-elected.
I have zero leverage on AT&T.
Some services can be government-operated or private. Trash collection is one of them, for example. I lived in many cities, and municipal trash collection companies were always better and not any more expensive.
> I can vote for a politician to fix the government services. And the local politicians know that keeping the government running well enough is needed to be re-elected
That is one issue among several reasons to pick a politician. Also politicians have limited powers to fire non-performers which gets bogged down in the court system to fire just one person.
> I have zero leverage on AT&T.
People can switch away easier from companies, it happens all the time, companies lose and gain customers all the time. Bad or mediocre service has killed many companies, the effect is far greater than on governments because they get to fund themselves from you even if you don't like or want them. Govt is the ultimate monopoly.
And BTW, I agree that Social Security overhead is unacceptable. It should be privatized and increased to at least $500 billion to be comparable with health insurance companies.
It's not acceptable at all to make private companies look bad.
> The program, called the Disability Case Processing System, or DCPS, was designed to improve case processing and enhance customer service. But six years and $288 million later the program has “delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns
Startup companies blow through hundreds of millions of VC dollars with little to show for it all the time. Theranos raised $700 million for a technology that never worked. Plenty of others wasted hundreds of millions building half-baked products that nobody wanted or that made no business sense. Remember Quibi?
The difference is that those companies eventually fail. The govt has essentially limitless taxpayer money behind it(till a currency crisis like Argentina, Greece etc. happens taking down the entire economy) because paying it is enforced by threat of violence and it can borrow and print money as much as it wants with deficit spending.
Also Theranos was aiming for something very innovative that still does not exist, whereas the govt IT systems are essentially glorified CRUD apps(no doubt complicated and with tricky integrations and need for reliability and security). It's an example where VCs could've exerted more scrutiny but chose not to and wasted their own money, hopefully a lesson learnt. As taxpayers, we have far fewer options, we cannot just pass on paying out hard earned money if we don't want to "invest".
Another example, the Queensland payroll system cost $1.2 billion over 8 years to develop, repair and maintain, to pay just 87K people. The initial estimated budget? $6.9 million.
> Also Theranos was aiming for something very innovative that still does not exist, whereas the govt IT systems are essentially glorified CRUD apps(no doubt complicated and with tricky integrations and need for reliability and security).
I worked both in the area of molecular biology and bioinformatics with some pretty nifty technology (which was later acquired by a large company). And in the area of giant ERP applications that are nothing but tons of boring forms.
I can confidently say that the complexity of ERP apps dwarfs anything that is needed for molecular biology.
It can happen yes, but VCs have very strong incentives to not waste their own money, if they feel like putting the effort into it. If they fail they may learn the lesson not to waste money, or even end up not having money to waste. In the government all the incentives are the opposite, to keep spending money or the budget would get reduced next year. If anyone tries to save costs, they make a lot of enemies both within and outside. They get nothing if they succeed, so the incentives are bad.
I think you may have a flawed understanding of how VCs work. VCs generally care little for one company does. That’s what the whole “invest in 500 startups” strategy is about. Now a $200M investment probably starts to leave that range and enters the “throw weight around to win”, but generally they care little about the software except as a means to an end to get returns and business growth and software value are only loosely correlated.
> Can you imagine raising $288 million from VCs for a software application while delivering so little?
What? You're imagining VCs caring about pizza money? Should I mention, perhaps, the AOL-TimeWarner merger? Or maybe AT&T buying DirecTV for $50B and essentially giving it away for $8B?
Heck, I was a part of an utterly failed project with a $150m budget (in 2005), in a large European company.
> For the main system they're also using COBOL, which has no Date data type, causing issues even in 2025.
And? They haven't missed a single payment day in all their existence, moving data between multiple types of media. While working with staff levels that won't even qualify as "skeleton" in plenty of companies.
> Heck, I was a part of an utterly failed project with a $150m budget (in 2005), in a large European company
Was it a just a somewhat complex CRUD app like the SSA example or most govt IT projects? Or were you guys trying for something more complicated and innovative and failed?
It was an ERP application from a large three-letter European company. In other words, a CRUD app with lots of UI forms. Nothing innovative or particularly interesting.
The hardware to deploy it was alone a couple of million. At least, I got to play with some rather cool gear (for that time).
> One big example is the DMV since almost every has experience dealing with it, long queue times are almost universal because no one gives a crap and it's very hard to fire a government employee.
I don't know what's wrong with the US, but here in Poland, there are hardly any queues at the (equivalent of) DMV. And we're nowhere near US's wealth levels, so public services here (in Poland) should be worse, not better. There's something very wrong in how the US is organizing its DMVs, if the queues are such an universal problem. But, it's not an issue with government services per se, just with this one instance of government service.
They're converting a grant, so Intel is worse off due to this move.
The only real benefit I can see is it looks more revenue neutral because the government getting something of value and Trump is unpopular for spending so much money on unfunded tax cuts.
I actually am interested in the government having a voting share in big companies. They have an interest too, and seeing what it is is neat. Basically, I see this as bringing certain dealings above board.
I think I agree overall, but "these kind of deals should be boring, not a media event" make me doubt that position, because "deal becomes a media event" seems so eventually-inevitable given how democracy works.
The “our president made a deal!” part of it makes me skeptical of actual long term patterns past a Trump administration.
While not walked back completely, a lot of what Trump does is minimized and scaled back after the initial theatrical moment. Still in a bad place, but usually some TACO moment happens.
And then, in the end, it’s some executive action that lasts as long as the current president is in power.
Democrats will not walk this one back. Having a stake in a hugely important industry is valuable. Being able to directly shape Intel's path is going to be historically important.
I think punishing interest rates are better than an equity stake. As Intel's rally shows, having the government as your equity holder is actually amazing for investors.
> On the other hand, I wish it were a more formalized process
It must at least involve Congress!
What's happening here is crazy: It's the same as if Congress authorized $X for a city bridge and Trump comes in and holds up the funds demanding a cut/kickback of the tolls.
The Constitution does not give the Executive the power to arbitrarily modify what Congress has authorized, converting between grants versus loans versus stock-purchases versus plain extortion.
I thought this too, but after reading some of the other comments here I read some of the text of the chips act and the 2021 NDAA (mostly section 9902) and AFAICT Congress appropriated a bunch of money for financial assistance for semiconductor companies and gave the Dept of Commerce the authority to determine the funding type.
That they were grants instead of any other instrument appears to be a Biden Commerce decision, not a congressional one.
I’m no lawyer and could certainly be missing something i the law that says it has to be grants but from what I see it looks like figuring out what to do the the money was pretty much delegated to dept of commerce with limited direction about eligibility and review criteria.
On a related story. Tesla was saved by a $500 million bailout loan from the DEO loan office. Part of the agreement was that the US government would take a stake in Tesla UNLESS they pay back the loan ahead of schedule. That's why Tesla paid it back ahead of schedule, Elon didn't want the government to take a stake. But he spun it as a victory for the US tax payer.
You're wrong because it wasn't some bailout it was a normal government loan available to to a wide range of companies. I'm not Tesla stan but it's massively misrepresenting the loan to call it a bailout. It's the kind of market investing the government should be doing, underwriting somewhat riskier loans to push the envelope on technology.
I agree. In fact, I think the government should own all utilities like they do in more socialist countries. It gets rid of price gouging, and the stabilizes the market in things that are necessary for human life.
The natural resources of the country should belong to all of us. Not just a select few.
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.
GF hasn't gone past the 12nm node. TI is at 45nm. Micron is on relatively recent processes, but they make RAM, not logic (which are totally different processes). Intel is the only chip manufacturer left that is working in logic at anything like the leading edge.
GF is a few nodes behind. Micron doesn't make semiconductors, they mostly make flash and whatnot. TI doesn't have the capacity or knowledge to expand to Intel's size/capacity
You're right but also wrong. Flash is just semiconductors etched in a different pattern than logic, but you don't print on semiconductors. Semiconductors are 'printed' on wafers via photolithography.
Intel's wafers are made of silicon, which is a semiconductor. Silicon on sapphire hasn't been widely used for a long time, if that's what you're thinking of. Photolithography prints resists on semiconductor wafers which are then used to pattern the next process step, such as wet etching, plasma etching, oxide growth, epitaxial polysilicon growth, ion implantation, etc. These mostly remove semiconductor from the wafer or alter its properties.
Interesting, I hadn't known that silicon is itself a semiconductor before all the circuits are added. Am I correct in saying that the etching process transforms a single semiconductor into billions?
No, silicon is still just one semiconductor, just like water is just one liquid. The substrate is still just one piece of silicon, despite having many silicon semiconductor devices fabricated in it. Polysilicon layers may or may not be additional pieces of silicon.
Much more likely that SMIC would, because TI isn't just 15 years behind; it also has the disadvantage of being in the US. See https://en.wikipedia.org/wiki/Semiconductor_industry_in_Chin... for a look at what it looks like where conditions are more favorable.
GF is a zombie company. Micron and TI are both far far away from leading edge. There is only one American company which is both developing and manufacturing leading edge nodes.
re: Micron - Memory is very different from logic chips. You vast number of repeating cells in memory. If any of them are bad you can just turn them off and bin them as lower capacity. You can do that to some extend with logic chips but not nearly as much as memory.
> the US expects China to invade Taiwan and this will kill TSMC in the process.
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.
I believe the most modern TSMC fabs outside of Taiwan are in Arizona. They are just moving to 4nm which is nearly 5 years old and just a revision of 5nm which is getting close to 7 years old.
TSMC aims to have N3 in Arizona by 2028 at the earliest which is 6 years after it first released. By that time, TSMC will have released N3X, N2, N2P, N2X, A16, and A14.
TSMC is heavily sponsored by the Taiwanese government and was created with the express purpose of making Taiwan so valuable that the West would be forced to defend them against China. Moving newer processes out of the country is against their national interests and they've made it clear that there's no plan to do that.
If (or when) China invades Taiwan we will be better off than Taiwan but I wouldn't call us "OK" at that point. That will be a major disruption.
It will take decades for the US to get where Taiwan is now in semiconductor manufacturing, if ever. It's not just about building the most advanced chip factory. It's about re-aligning the entire nation's value system and culture to allow such development to happen in the first place.
We complain about the money we spend already. And now we're supposed to subsidize an entire industry to the point where we can build the most complex machines known to civilization at scale in a time-frame that matters to a global conflict that's potentially approaching soon? I don't see it.
> It's about re-aligning the entire nation's value system and culture to allow such development to happen in the first place.
It's taken about 8 years to realign the US from a democracy to a fascist regime, something that was nearly unthinkable. This isn't a hard problem with the right propaganda and manipulation.
Yes but it's easy to go from democracy to fascism. It's harder going the other way. It's like going from a clean house to a messy house is much easier than going from a filthy house to a tidy house.
Outside of Taiwan TSMC foundries are just pumping out already developed non leading edge fab processes. Everyone who matters to TSMC tech development is in Taiwan.
The vast majority of TSMC production is in taiwan. If china invades the fabs will be destroyed. They pretty much would be forced to just stop operating, yes.
I see it different. The loser is the taxpayers. The loser is the market, which is less and less free. When there’s no incentive to run your company correctly… we get another company not run correctly.
This is my thought on it too. I don't think this is meant to be a political win so much as US intelligence views chip manufacturing extremely strategically. I also don't know about what will happen to TSMC. But the US has been pushing for US made GPUs as well. This goes back to Biden's admin as well.
Quite the opposite. Part of the reason Trump wanted to end the Russia-Ukraine war so bad was because they wanted to gear up for the "big fight". Ukraine simply wasn't a big strategic priority which is why they wanted to either end the war (best case), or shift responsibility over to Europe if that failed.
Lookup Elbridge Colby - served in first Trump admin and now Undersecretary of Defense. Along with Hegseth and JD Vance, they are all that same line of thought
And now China knows the US expects this and it also knows the US does not expect to stop China, so China knows that it can expect the US to do very little. It's game theory turtles all the way down...
Edit: I think it's a misconception that China cares much about fabs in Taiwan. It wants unification.
As far as I know none of them manufacture anything resembling a replacement for a Xeon, which is relevant to national security because those are uses in military applications.
I'm surprised to see on https://en.wikipedia.org/wiki/Microchip_Technology that Microchip does in fact have fabs. I thought it was fabless! Its fabs are in the US, but the assembly and test facilities are all across the Pacific.
If the argument was for protecting Intel, then the US government should be placing huge orders with Intel for solutions that will fund R&D and allow the company to regain its position as a foundry. They should be tapping into the defense budget. DARPA should be involved. This was an opportunity for petty extortion and a step towards socialism.
A large bulk of CPU orders comes from Google, Amazon, and Microsoft. Want to say 50% of all AMD revenue is datacenters, and the Hyperscalers represent the largest chunk of that.
Huge order for... what? DoD's needs for chips are quite modest in quantity. Truth is that the US Gov doesn't need the volume which requires Intel to keep afloat.
Government involvement is the fastest way to corrupt the purpose of an organization, hollow out its soul and quickly get rid of all the competant people.
There's a reason that the DOGE findings made a laughing stock of government employees.
The only charitable answer I could give is national security reasons for having domestic chip production, and even that could be accomplished in ways that don’t require the federal government having an ownership stake in Intel. For example, I don’t think the federal government has ownership stakes in Lockheed Martin and Northrop Grumman, despite those companies’ dependence on the military.
You are asking why save Intel of all chip manufacturers, and the answer is because there aren't any other major chip manufacturers in the US.
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.
In the event that Taiwan is invaded, the EVERYONE would suddenly have a huge problem getting access to any kind of high end chips, be they CPUs or GPUs.
China would not takeover TSMC intact. Even if they did, they would not be able to operate it for quite some time (years), if ever.
US wants to maintain chip manufacturing presence and expertise within the borders, so saving everyone would achieve the goal but at a higher cost, so they're just focusing on the US ones in trouble.
I don't expect a good reason given the history of this Administration, but a reason in my mind to save Intel is there's only 3 license holders for x86 CPUs. Intel, AMD (American), and VIA (Taiwanese). A dead Intel leaves a single American company that is able to make x86 processors, and a monopoly for actually good x86 CPUs. But somehow I suspect there's no logical reason for this besides lining the pockets of those in the Administration.
I hope this is not the reason. I think x86 is a deadend technology. ARM's energy superiority makes it a better choice. x86 only still being used due to legacy/backwards compatibility but thats changing. Apple moved completely away from x86. Theres more and more ARM based windows computers being sold. Theres no x86 chips in phones.
Why would the ISA matter to the government? I could see this being about Intel's physical manufacturing capabilities, but the ISA should be pretty irrelevant. Recompile what code you can, run the rest via qemu-user-static.
While there are other good reasons to save Intel, if it went under, someone could still buy the license. I can’t imagine why anyone would want a license to x86 in 2025. It’s not like all of the companies designing custom chips are going to be falling over themselves to design use the x86 ISA.
The major patents on all the most important parts of x86 expired years ago now. Nobody wants to take on a legacy ISA with tons of footguns everywhere when newer ISAs have learned a lot of lessons from x86 about how to do things better.
I haven't heard of them until this comment, but reading through Wikipedia, and a techpowerup article, I'm not seeing that they actually own a license to manufacture x86 cpus freely. It seems like they were able to due to it being a partnership with AMD. I could easily be wrong though.
From my vague understanding I thought that Hygon is able to build atop Zen 1 IP that AMD gave Hygon, although they can't get anything newer because of restrictions on doing business with China.
They are the only US company that can produce cutting edge chips now and realistically within the next 15+ years. It doesn’t matter that TSMC produces chips in the US. That is nice for the short term but doesn’t do much for the US in the long term if TSMC falls under China’s influence.
Intel is in the midst of a dramatic turnaround and huge shift in strategy. It might fail. But if they succeed it puts Intel and the US in a much stronger position in terms of technology and military leadership.
It mattered for China to have Apple/Foxconn/etc assemble phones in China. By this same logic, won’t TSMC have more tacit knowledge to offer America than Intel, even if their independence is short-lived?
Why would TSMC or Taiwan want to give that information to the United States? There is a strategic reason why TSMC does not build their latest nodes and processes in the United States and why their R&D happens in Taiwan. They want / need The United States to protect Taiwan and their interests. It opens up strategic options for the United States if Intel or another US based company can produce cutting edge chips in the ballpark of TSMC.
This is a sure giveaway that the US military depends on Intel. It is the only major chip producer that has fabs in the US, and it is also the creator of the x86 architecture. That would mean that without Intel the military would become dependent on chips from Chinese Taiwan.
Not just the military, but the majority of consumer devices as well.
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.
>This is a sure giveaway that the US military depends on Intel.
"Giveaway?" This isn't some secret, everyone knows the military depends on x86 processors, and having a company that can produce them domestically is a national security concern.
The thinking might be the government needs a local industry for security. Think submarine manufacturing. Not a huge private market for
that, but best to keep local so the supply can’t be cut off.
Though usually the government isn’t the best stewards of companies. When I worked for a large government contractor someone joked “yesterday’s technology tomorrow”. Some of that is for reliability, but it wasn’t cutting edge in a lot of ways.
They supply components for the defense industry, where foreign production isn't a viable option. No one bank is more important than that. This is also why Micron is getting a free fab for strategic redundancy despite no clear reason why they would need 2x capacity after onshoring back to Boise.
The US can't employ poverty-tier labor to enable competitive margins, though. American businesses and global trade partners already largely reject Intel's foundry services.
Labor is not the key factor driving chip prices or performance. Fabs are highly automated and filled with extremely precise machinery. The maintenance and upkeep of machinery, the yield per wafer, and consumer demand drive the prices. Labor is basically a rounding error.
Doesn't matter. All of the US's advanced weaponry systems now use "state of the art" electronic systems, which in the context of defense only means "not decades out of date." Two or three generations old is perfectly fine. The military does not need the latest and greatest CPUs and GPUs going into the iPhone 17 or whatever, but it does need the equivalent of the chip in the iPhone 12 or iPhone 8 or whatever for integration into next generation weapons systems.
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 or drones use chips from TSMC, and TSMC is in occupied territory or a war zone... the US can't make more missiles or drones. 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.
The China narrative is pure nonsense. You always have guys like Gordon Chang pushing alternating stories about the coming collapse of China, followed by a scary hegemonic whatever.
Regardless of whether you believe the China narrative is true or not (that is to say, whether China will actually do this or not), it is driving US policy.
I mostly agree with this but have a hard time digesting the fact that someone would invest going to war with inferior looking strategy and technology.
Future wars are likely going to be GPU driven, ML heavy entities where efficiency matters a lot more than brute force, blunt grenade throwing wars of the past.
A super power like US would likely want to be in the forefront of this if they happen to be in a tussle with a worthy adversary.
Bleeding edge efficiency doesn't matter as much as you think in those applications. A 20% or 50% energy efficiency matters a lot for datacenters or mobile phones. It matters less in a smart bomb, missile, or tank.
The existing systems do this. Look up the F-35. It's what I was referencing. Bleeding edge state of the art chips aren't required though, or even practical -- these systems need a lot of validation before use, and that makes them always a few process generation behind.
I'm not talking about the plane. I'm talking about the weapon itself.
Imagine a next-generation fire-and-forget weapons with radar and broad-spectrum camera arrays and an AI trained on a fused version of all this data. Typical defenses like chaff or flares would be rendered almost entirely useless.
This kind of visual approach also renders modern stealth almost completely useless. When an unexpected plane is found on L-band (or some other low-frequency radar), the AD would simply fire a couple of missiles into the area with instructions to visually identify the large objects moving at fast speeds using the fusion of these different sensors (and ground+air-based radars) while in flight.
We are getting pretty close to being able to do this in realtime with cellphone-level chips.
Yeah, this kind of whole-battlefield sensor integration is part of the F-35 program. It's not specific to the plane. You don't need the absolute latest gen hardware to do this.
I don't care how nihilist or kafkaesque you want to take the conversation - the math won't check out. You can't sustain a third-sector economy on second-sector jobs while importing first-sector goods. The entire financial system in America won't survive that sort of transition, it would be the Great Leap Forward of the 21st century.
One of the things about the Great Leap Forward is that it happened. Just because a path of action will obviously lead to mass death and suffering while accomplishing nothing doesn't mean it won't be taken.
This point of view seems to bear repeating these days as the US leadership seems to be re-purposing Lysenkoism and its methods for the pro carbon burn movement and the anti-biological research movement.
Free market capitalism is great until you’re about to be the big Loser. And then the big dog steps in and yells for time out.
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?
(disclosure Intel Shareholder) I don't think they are one year behind. I think it is more than one year and for a long time they have not been closing in.
Yeah. Risky compared to Intel. Intel manufactures chips _right now_. They have lost their process edge, but if I have to put chips into a drone tomorrow, I'm betting on Intel rather than any bag of scrappy kids. The risk that they _can't_ produce chips is the same risk as that of Hillsboro Oregon getting carpet bombed -- which is of course not 0%.
Note that there are several drone microcontroller manufacturers based in the U.S. right now - ModalAI, ARK Electronics, Rotor Riot, etc.
The thing about drones is that they actually don't require much computational power compared to modern consumer computing. It's just math - control systems, calculus, trig, waypoints, etc. All of these were solved problems in the days of the Apollo Guidance computer, and will run comfortably on chips from 2 decades ago. The STM32F722 microcontroller that is one of the most common hobbyist drone chips is built on the 90nm process node, runs at 216MHz, has 512K of SRAM, and costs about $5/chip. FWIW, it's made in France and Italy rather than China, and STMicroelectronics owns its own fabs rather than outsourcing to TSMC or Chinese companies.
If you want to do things like computer vision on the drone, the computational requirements are quite a bit higher, but you can still run something like YOLO at orders of magnitude less computational power than what you've got in a Pixel 9 or iPhone 16.
...which makes me wonder if a better strategy for the military would be to fund a wide variety of domestic chip manufacturers operating at decades-old process nodes (eg. the 65nm process node from 2005 seems to be at about the sweet spot), rather than try to prop up the one American company that can compete on cutting edge 7nm process nodes. Particularly since the experience of WW2 was that simple, robust designs that could be easily licensed to other suppliers and mass produced (eg. the Hawker Hurricane, Grumman F6F Hellcat, Grumman/GM TBF Avenger, Liberty ship, escort carrier) were much more effective at turning the tide of battle than designs that were on the cutting edge of technology (eg. the Vought F4U Corsair, Gloster Meteor, Japanese Shinano aircraft carrier). The latter were often better in absolute performance, but arrived late, in small numbers, and with teething troubles that made the former carry the bulk of the battle. The Liberty Ship, for example, used reciprocating steam engines that were 50-year-old technology in WW2, but they were "good enough" and dead simple to make.
You make an excellent point. My uC experience is limited to ESP32 chips (made in china) but that's another example of how much 'old' tech can do when it's cheap, easily available, easy to integrate, and not running bloatware.
If you think getting a couple million dollars of funding and expecting to show profitability in a few years is hard, just wait till you try it with billions and 5+ years.
This feels like another signal that the U.S. as an economic superpower is transitioning into something else.
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?
hopefully it's only for 3 more years. One aspect of fascism is government politicians taking over businesses for their own power and monetary enrichment. I'm not sure how this makes Trump richer, but I'm sure there is some angle to it, there always is.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> 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.
Because this clears the way to sell Intel Foundry and separate the chip design from the chip-manufacturing businesses completely.
The CHiPs act money had claw-backs such that if Intel sold the Foundry off they had to pay the government all the money back. This new deal waives all the clawbacks and says instead the Government gets warrants, good for five years, for 5% of the company at $20/share, good once they control less than 51% of the Foundry.
Ergo, the reason for the deal is that the board wants to sell off the Foundry, and didn't want to pay back the CHiPS act money.
Good context, thanks. If it’s likely that the Foundry will be sold off, do you view the extra 5% as a short-term profit and not really a geopolitical/strategic protection?
Seems the Foundry is the bit that USG really is trying to backstop.
With time military companies need to pay their allegiance money so that they can break sanctions and oh national security. Some will approve because of the same reasons as Nvidia deal, who leaves that money on the table?
No, the shares already existed, they were just held by Intel. According to their most recent 10-K, 10 billion shares of common stock are authorized, but only 4.33 billion were issued and outstanding.
The CHIPS grants had clawback provisions, which carry risk. This transaction removes that risk, so it's very good news for Intel.
> 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.
Because the government having a financial interest in Intel’s success is expected by the market to result in the government acting in Intel’s interest, in order to profit.
You would think the US government would be interested in the US government's success, but the past eight months have proven starkly otherwise. What makes one think they will be looking out for Intel's interests any better?
Just in case you aren't joking, they did not fire the person responsible for the bad numbers. They fired the person responsible for observing and reporting them.
I was joking, although it was a gesture at a real thing. I don't know how much they don't care about success, versus caring but being deeply confused about how to reach it, versus in some sense "caring" but prioritizing other things. But regardless, retaliation against bearers of bad news is a great way to horrifically mismanage an organization, and we seem to be seeing it repeatedly from this administration, and it is alarming.
Government now has a vested interest in seeing Intel succeed. And as much as RW debate in bad faith about cutting public funding being good and private entities should pick up the slack etc. there is no bigger catalyst than government policy. Intel can now get preferential policies like bigger tax breaks/holidays, preferential treatment in government contracts, cheaper access to Federal land etc.
In the long term though, at least in hands of the government like the current admin, they will ensure Intel slows down innovation. They will push for every company in US to use Intel chips in one way or the other - national security and what not. Without competition companies often get complacent - not many can match the might of a government and US govt at that. So, yay for national security and nay for Intel becoming innovation powerhouse.
Sometimes, there are returns on investments beyond what an accountant would calculate, but the investment only costs the same. Making stock priced only for normal returns a buy for beneficiaries of said additional returns.
In this case, reducing the risk associated with the imported chip supply.
Everyone is talking about "bailouts" and "owning a company that the government funds."
This isn't about that at all. This is about the breakdown of the rule of law, a unitary executive bypassing all other branches of government and demanding a private enterprise give itself over to the government.
If you don't think there was an "or else" as part of this deal, you're largely mistaken. If you don't think that there will be other questionalbe demands placed on Intel in the future from this government, you are largely mistaken.
But y'all go ahead and can keep arguing over whether we should "get something back" from this deal. Because that's really going to maker ameraica graet agian.
“National security” is often used by third world countries to nationalise companies and industries. Often with a bad outcome.
Once the money is in, government becomes invested in the success of the company. This leads to preferential policies and government demands for the invested company. I think it is safe to say that US is going full on third world strong man government at this point.
> However, it had been argued that the Treasury lacked the statutory authority to direct TARP funds to the automakers, since TARP is limited to "financial institutions" under Section 102 of the TARP. It was also argued that providing TARP funds to automaker's financing operations, such as GMAC, runs counter to the intent of Congress for limiting TARP funds to true "financial institutions".[79] On December 19, 2008, President Bush used his executive authority to declare that TARP funds may be spent on any program he personally deems necessary to avert the financial crisis, and declared Section 102 to be nonbinding.
Also, “unitary executive” doesn’t mean overriding other branches. It just means that whatever powers the executive branch does or does not have are exercised by the President, just like the 535 members of Congress exercise all the powers of Congress, and the 9 Justices exercise all of the powers of the Supreme Court. It means that executive branch employees don’t have independent powers, just as House staffers and Supreme Court law clerks don’t have independent powers.
See: https://en.wikipedia.org/wiki/Federalist_No._70 (“Federalist No. 70 emphasizes the unitary structure of the executive. The strong executive must be unitary, Hamilton says, because ‘unity is conducive to energy...[d]ecision, activity, secrecy, and dispatch will generally characterize the proceedings of one man in a much more eminent degree than the proceedings of any greater number.’”).
> Also, “unitary executive” doesn’t mean overriding other branches. It just means that whatever powers the executive branch does or does not have are exercised by the President,
And then you find the executive is what chooses to enforce rulings against the executive. They were not trying to set up something like the UN security council with a defacto veto on all passed law.
> And then you find the executive is what chooses to enforce rulings against the executive
Correct. But this is true in almost any conceivable system. The entity charged with enforcing the law will be charged with enforcing the law against itself. “Who watches the watchers?” The founders thought of that and their solution to that was elections and a relatively short 4-year term.
Conceiving of the executive as having subparts independent of the elected executive actually breaks the system. Because now, whatever subpart you assign the law enforcement function is unelected and insulated from political accountability. Now, nobody can watch the watchers!
It turns out the founders were smarter than the current facility of Harvard Law School.
>Also, “unitary executive” doesn’t mean overriding other branches
I feel we're headed for a No True Scotsman fallacy. The Trump Regime and Roberts court endorse the unitary executive theory, and they are happily overriding Article 1 powers and violating laws like the Administrative Procedures Act based on this theory's farcical and ahistorical logic.
If the theory wasn't giving him more power (like firing non-political appointees without cause or withholding funds appropriated by Congress) he wouldn't be using it.
The "unitary executive theory" is just a pejorative label for Article II, Section 1, Clause 1: "The executive Power shall be vested in a President of the United States of America." Alexander Hamilton talks about it in Federalist 70: "I rarely met with an intelligent man from any of the States, who did not admit, as the result of experience, that the UNITY of the executive of this State was one of the best of the distinguishing features of our constitution." (https://avalon.law.yale.edu/18th_century/fed70.asp).
Nobody called it a "theory" until FDR appointees ginned up a fourth branch of government in the 20th century. Then, they needed a label for what actually existed in the constitution to distinguish it from the shit they just made up. But most of the people who use the phrase "unitary executive theory" also think "emanations from penumbras" is constitutional law...
Also, the APA doesn't apply to the President, and it wouldn't be constitutional for it to do so.
What Trump is doing is pure extortion. Intel gives up equity, and in exchange, Trump maybe doesn't use the massive power of the state to claw back billions of dollars that were legally awarded to Intel, and Trump stops pressuring Intel to fire their CEO (note how he now calls the CEO "highly respected").
The comparison to the GM bailout makes no sense. GM got something that it needed from the bailout. Here, all Intel is getting is the withdrawal of threats that Trump himself made. It's mob boss style government, and it's happening to many institutions in this country (law firms, universities, corporations, etc). Why you would want to try to normalize it is utterly beyond me. Maybe you just like being the "well actually" guy because you think it makes you sound smarter than everyone else.
I’m not a “well actually” guy, I’m a constitutional fundamentalist. It’s definitionally not extortion to threaten to do something you have a legal right to do. The CHIPs Act gave the executive a bunch of money for making discretionary grants. And that means the President has a bunch of money to make discretionary grants.
Also, why should we give companies money without getting equity?
Knowledge doesn’t override partisanship. Rayiner used to be a thoughtful voice here but, like many other Republicans, in the age of Trump personal fealty outranks knowledge or past principles.
...thats how the US Constitution works. Congress passes laws (CHIPS Act) and the executive branch is empowered to carry them out - in this case the Secretary of Commerce and Commerce Dept. One can argue whether it stretches the intent of the law, nothing wrong with debate. But as of now, I don't think any judge or court has contested in the interpretation of the language.
The takeaway is the next Democrat president should just declare a public transit emergency and start building while the courts squabble. Same for housing reform. Same for climate change and shutting down coal power plants—once you shut it down and take out the turbines, it doesn’t matter what the courts say.
> as of now, I don't think any judge or court has contested in the interpretation of the language
Who has standing to sue here? The best I could see is a shareholder lawsuit, but that will take years. Meanwhile, this administration is getting slapped down by courts across the country, including a SCOTUS willing to overturn precedent to curry his favour.
The "or else' isn't the problem. The problem is the government trying to get involved in the first place. Intel was not forced to give away 10% of their company for 10 billion dollars, they simply wanted the 10 billion dollars. It's the fault of our government for propping up failing companies. Intel should be dying instead.
Intel may well have wanted to donate some ownership more than it wanted 10 billion dollars. They are now in a position to argue forever that what's good for Intel is good for the federal government.
Whatever you decide is, by definition, what you believe is true. You don't seem to be particularly skilled at accurately determining what's true, but there's not much I can do about that other than providing the advice I've already given you.
Trump was explicit about the "or else" part. He said publicly that Intel did it because "[the CEO] wanted to keep his job," a reference to Trump's earlier pressure for him to be fired due to his vulnerability to pressure from the CCP.
Why would the government need to "demand" to buy a piece of a publicly-traded company? Is 10% of Intel more than what is being traded in the public market?
Intel hasn't gotten most of the money they were awarded. Even the Biden administration were hesitant in doling it out, because of concerns that Intel could deliver. That's why out of frustration, the previous CEO became vocal in saying "We still haven't gotten any money yet!" and was openly frustrated about it.
Lip-Bu Tan, in the last quarterly earnings signaled a decent likelihood of not developing 14A (and thus halting much of the semiconductor infrastructure they implied they would need the CHIPS money for). So it's perfectly fair for the government to say "We're not giving you the rest of the money."
What this deal does is release the rest of the money, but with strings attached.
There were always strings attached - even with the prior administration. The strings have merely changed, and Intel benefits by actually getting the money now vs a long drawn out process.
The main point is that even with the prior administration, it wasn't a given Intel would receive all the money. This way, they get the full amount, and fast.
They had that money in the bank (and much more) when they lobbied to get the CHIPS act passed. They want the money.
So yes, this is all about getting the rest of the money.
The administration is deciding they should not get it for free. Which totally makes sense given that Intel is openly signaling a willingness to halt semiconductor research.
This will scare off foreign investment. Especially pharma which can be considered national security. Why would I invest billions in the US to risk having my factories taken by the US government when the market in India or China is way bigger and the risk at this time seems a lot less.
> is about the breakdown of the rule of law, a unitary executive bypassing all other branches of government and demanding a private enterprise give itself over to the government.
What do you think about Senator Bernie Sanders backing Trump plan for government stake in Intel?
This is worse than I expected. They're apparently putting in no new money and retroactively demanding stock in exchange for grants that were already awarded. If Intel can't afford to build 14A and we're putting in no net new money... then Intel still can't afford 14A? Unless they were lying.
There werestrings attached to the CHIPs act money. Not saying this is some great deal. It isn't. It is a deal made from a place of necessity and weakness for Intel, but it gives them the cash infusion they need in the short term. Right now Intel's only goal is to have enough money to get 14a off the ground and attract at least one large external customer to prove their capabilities.
... what would a chip version of 641A even look like?
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?
Ironic, Western politicians thought opening up to trade with China would lead to it adopting a Western model of government. Instead it's lead to the USA adopting the Chinese one.
Yeah, this so weird coming from the US. The US government has a history of writing no-strings-attached blank cheques to people/companies just so avoid the stigma of government control in public companies.
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?
Kinda. But I think the current Chinese model is actually much closer to how the USA used to work when there was competition with the USSR. Closer than the US of today compared to the 70s and 80s.
The current Chinese model's basically you have fully publicly traded companies, companies who are either minority or majority owned by a certain provincial government and ones who are either minority or majority owned by the central government (although this is surprisingly rare outside of key areas like telco/banking)
"Air America was an American passenger and cargo airline established in 1946 and covertly owned and operated by the Central Intelligence Agency (CIA) from 1950 to 1976."
We aren't anywhere close to being in a depression though. What extraordinary situation requires the government to take a stake in a public company and under what conditions will this position be liquidated?
> We aren't anywhere close to being in a depression though.
This may be true in the economic sense. But “depression” is as much a political sensation as it is a technically defined economic term. We happen to live in an era where economics for the public is profoundly politicized.
We are very close to being in a depression. Most of our money has nothing to do with actually feeding or housing people. If the wrong thing shifts, we're toast.
The unemployment rate is still near historic lows and while new job numbers are getting worse they're still positive overall. We aren't anywhere close to being in a depression currently.
It somewhat makes sense in terms of industries which are deemed strategically important. Intel needs to start thinking long term instead of short term profits.
Intel has had a couple years of saying they were going into a more long term vision and failing, and it’s unclear how direct government ownership will make them get better at execution
if someone believes this, they should buy intel and just do it outright! But no one does because it's not as easy as "just think long term" - if it were, berkshire has the liquid money to buy intel several times over.
That's very cute quip but I notice that it places the blame on 'trade with China' for an alarming problem that is in fact entirely the doing of US voters expressing their values (or the lack of them) in fair elections.
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.
Civil forfeiture existed since 1660s, and was used initially to confiscate smugglers' vessels. Then it was dug out during Prohibition, and turned toxic in 1980s when the agencies doing the forfeiture (e.g. police) were allowed to keep the confiscated property. Ideally it should be used for restitution (e.g. to victims of fraud), but...
I suspect you were growing up when this was in full swing already.
We also have criminal forfeiture, which was leveraged a lot more then. Civil forfeiture use expanded dramatically in recent decades due to profit sharing with DOJ alongside court challenges failing, suggesting the need for constitutional amendment if awareness of the practice improves.
The Chinese have been surprisingly willing to let companies and sectors die even at the expense of growth (see real estate), I think it's honestly too charitable to compare the US to China, which has at least some degree of technocratic governance, the US went straight for something out of the Tropico franchise
We're living in the time of irony. Up is Down, Left is Right, Right is Left. Republicans have become Socialist. Free Speech absolutist now against Free Speech.
The promiscuous relation between government and tech is as old as Silicon Valley. I'm fact, it created Silicon Valley. It started when people in China were still building backyard furnaces.
It’s not “adopting” the Chinese model yet, so much as incoherently copying bits and pieces. If you want to run effective industrial policy you need sufficient state capacity and an army of technocrats who are experts on industrial policy. Trump’s second term performance gives no hope on both fronts.
[Ex Post Facto Clause, US Constitution](https://www.congress.gov/crs-product/IF11293). Oops, I thought it was so obviously going to be done away with in the courts, but in 1912 the Supreme Court ruled that it applies only to criminal punishments.
I look forward to the people who always claim “taxation is theft” to comment on a single man deciding to strong arm a company into giving 10% to the government.
Isn't it the opposite of a bailout, given that the US gov't is seizing an ownership stake retroactively based on past grants/bailouts but giving no new money at this time?
CHIPS act is a grant similar to a small business grant, not a bailout at all. It was intended to incentivize chip production in the United States and was available to any company manufacturing in the united states. It had no equity strings attached, as authorized by congress.
> 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.
I’m reminded that Chrysler took a big loan from the US government in 1979, $1.5 billion which today is equivalent to about $5.9 billion USD according to the inflation calculator I found.
I finally grok the Republican party. It's only socialism if it helps the poor. Government handouts to corporations and trade protectionism? Mainly helps the rich, so it's not socialism. Tax money spent on a special interest program? Again, if it mainly helps the rich (or their party's base), no problemo. They're the Kleptocracy Party.
A lot of criticism of China is about how the government controls companies... isn't this literally it? I mean it was already the case before, but they tried to pretend it wasn't, now they literally own a stake in intel.
Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point.
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.
> Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point
I'm not sure how this applies.
The US government just gained a 10% stake for nothing (that wasn't already given). Effectively going from the scenario you are painting to now taking a part of the profit as well.
The whole point of equity is that it can go to zero. Profit sharing means that the government had an upside (if Intel became profitable) and no downside. Now, if Intel loses money or goes bankrupt, 10 % of those losses automatically get socialised.
If you’re going to give taxpayer money to a for-profit company, taxpayers should receive a share of the company in return. I generally don’t like 90% of the policies we’ve got going on right now, but I actually feel okay about this one.
> taxpayers should receive a share of the company in return
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.
Doesn't this create an incentive for the US Gov't to boost Intel and harm their competitors? That seems not great to me from a competition & healthy markets standpoint.
In the rare conditions where this has been necessary in the past, US companies have been given clear terms for regaining control of those shares. I'm not seeing any buyback provisions.
This is ignoring the original agreement of profit-sharing with the government as was in Biden’s original plan. Feeling “okay” or not “okay” is irrelevant until we know how well Intel does in the next decade and calculate the cost against the profit sharing agreement.
Yeah, I haven’t dug into the numbers to know. Which option makes more money for the government (and therefore the taxpayer, sort of) - a profit sharing agreement, or a share of the company (which, as with all publicly traded companies, is a profit sharing agreement that sometimes happens through dividends, and sometimes happens through stock sales).
Who cares about the money recovery, the actual concern is about getting the production up and running. This doesn’t really address that in any capacity.
True. I’d probably prefer to see the money go to a better performing company, but since there are like, 2 companies in the US that actually make semiconductors, there isn’t much other than starting a whole new company. Which, for $10B isn’t possible in this industry. So if the money is going to go to Intel, I at least want a cut of it, is my point.
We already got a “cut of it”. This is just redefining the “cut” we get is my point. Either way though you probably won’t ever hear the results of the cut. To get value from this cut the government would have to sell shares worth much more than they are now. You said something about a better company?
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> 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?
The answer is in the paragraph in between the two you quoted from. The money for the purchase has already been appropriated by Congress and awarded to Intel. The awards didn't previously have this giant string attached where Intel gives stock in return. But now they do.
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.
Yes, but its semiconductor industry so its complicated.
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.
That's precisely how private citizen Trump ran his businesses as well. Make an agreement with contractors to get work started knowing full well those agreements were never going to be honored. Instead, refuse to pay anything forcing contractors to renegotiate at much worse terms vs not getting anything at all. The whole time banking on these contractors not willing to fight in court. That was the art of the deal
> Isn't that pretty bad, Darth Vader style changing of previously agreed on deals ?
There has been some changing of deals on Intel's part as well, with indefinite delays on US fab buildouts the US passed a bill to subsidize. Now the US is taking some equity for its debt.
Far more dramatic Government intervention took place in 2009 when the US bailed out domestic automakers, including equity. Don't recall as much angst about that among the laptop class. Because Obama.
> Isn't that pretty bad, Darth Vader style changing of previously agreed on deals ?
haha, is this the first you hear of this Trump guy? He rutinely breaks deals, like all the fucking time.
(I get that this was not his deal, he breaks those too)
> Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
Extortion.
Recent Supreme Court decisions have permitted the government to unilaterally cancel disbursements, even in flagrant violation of the plain text of law, impervious to preliminary injunctions, and then put up procedural hurdles to significantly increase the cost of reaching a final judgment in favor of the plaintiff. See, e.g., the most recent decisions issued this week in National Institutes of Health v. American Public Health Assn.: https://www.supremecourt.gov/opinions/relatingtoorders/24
So presumably the administration's deal was, give us what we ask for and you'll get the money Congress awarded, or don't and wait 1-2 years for any case to wind its way through the courts.
Also, the timing is mighty suspicious, with this NIH decision being published yesterday (21st) and the announcement happening this morning (22nd). I wouldn't be surprised if Intel's lawyers were waiting (perhaps slow-walking the admin) for this particular NIH decision, and when it came down in favor of the government advised the CEO the only way to get the remaining billions disbursed in any reasonable amount of time was to acquiesce to Trump's demand and close the deal.
I had seen that, but I don't consider that "paying nothing". That's paying something. I'm also confused how it's a "grant" if it's completely transactional. That's not a string attached, that's just a purchase. So I guess it's just political spin on all sides.
Depends on who you ask. Trump himself seems to think the US is getting 10% for free. I think that's a fair assessment given that these grants were already supposed to be paid out to Intel, without any kind of equity stake promised.
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.
> Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant.
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.
Trump feels Biden gave intel billions for nothing. Trump feels he’s balanced the scales by getting 10% of Intel. Trump gets to spin it as getting 10% of Intel for nothing.
It's effectively a grant. The US government isn't buying existing shares. Intel is issuing new shares and selling them to the US government - so actual money is being transferred to Intel (and existing shares are being diluted as a result).
Socializing a corporate venture with peace time debt seems counter to the ideals of free market capitalism. Even the takeover of "government motors" (GM) during the Great Recession left many concerned about government overreach. Boeing killed people with a bad product, and they only faced a fine without direct equity takeover.
The clearer picture comes from Reuters[0], as usual:
>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.
> "The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars,” President Trump wrote"
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.
Arguably the alternative was the government just... not giving them the CHIPS Act money. (And there's certainly a point to be made that Trump altering the deal is... problematic.)
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?)
> "About $7.8 billion had been been pledged to Intel under the incentives program, but only $2.2 billion had been funded so far. Another $3.2 billion of the government investment is coming through the funds from another program called “Secure Enclave.”"
The funds were already going to Intel. Trump just decided to demand 10% of the company for the already earmarked incentive programs. It was pure extortion.
> 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.
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!
And now we see Trump taking over the US economy! He will not stop there, of course. If Intel folded, other companies of "national interest" will follow suit and Trump will appoint his friends to each of them.
Didn’t the US invade Iran when they did this to their oil industry? (Yes I know 10% is different to 100%, but wow… I thought the US shun commandeering of private companies?)
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.
The surprise is the federal government acting like an unfair negotiator, substantially altering the deal after it had already been struck. Equity in return for investment grants was never a part of CHIPS, and was only made part of it by Trump who seems to have originally wanted to kill the deal because it wasn't made by him.
The question is can a US purchase help Intel turn things around? As a corporation Intel has really struggled for over a decade and has trouble with its foundry back even at the 10nm level. Will the US purchase have any impact on Intel reaching competitive levels with TSMC?
Trying to ignore the politicking on this so it can be clear on what exactly is “happening”.
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.
First, this is different because this was not what was agreed when Intel sought the grant. So I reserve the right to see as ‘bad’ a coercive action.
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
I don’t think people are conflicted over the math. The nature of this, the manner in which it went down, and the implications for the future are what people seem to care much more about.
Let Intel fail. Other companies will buy state of the art(ish) EUV fabs at a fraction of the normal cost when they're liquidated in bankruptcy. Then we might have several companies on the leading edge.
Looks like they will get common shares (not preferred). Could Intel create a new share class for this investment (with different voting rights)? Does 10% give the government a controlling interest?
Did Lip Bu Tan initially try to say no to this? You'd kind of expect him to say no. Is that why Trump tried to oust him? Is Trump trying to oust him the reason Intel are now accepting this?
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.
The investment from Softbank is interesting because ARM is also a portfolio company of theirs. ARM has said they want to make their own chips now so Intel might be a good candidate for that.
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 wasteful and destructive capitalistic competition, Intel’s revolutionary “people’s processors” (soon to be developed) will ensure that the world’s most advanced AI chips are made in America. And priced within the reach of every US worker.
I am expecting shareholders to be very upset. If, as Matt Levine likes to say, everything is securities fraud then this is going to court one way or another.
For a party who talks constantly about freedom, this administration is sure doing a lot to encroach on said freedom, of both individuals and corporations.
There's an option for the US to buy an additional 5% if Intel sells so it doesn't have majority ownership of its fabs.
But I think the real strings are a soft, private insistence that Intel won't be allowed to sell itself overseas.
The Defense Production Act and the Committee on Foreign Investment in the United States would be used to prevent the sale. The carrot is the whatever $18B in grants and investment, the stick is legislation that allows the government to prevent a sale.
No strings common share purchase means cash in hand, which implies Intel can spend it on any operational cost, including buying billions in TSMC wafers (which they already do).
For Nvidia this is already happening. They're taking a chunk of the profits of Nvidia operations in China. The Chinese have been prescient when stopped any Intel and Nvidia chips in government and strategic areas of China.
Survival is not the issue, it is about control. Today 10% Intel stake (non-voting, bought with already-promised CHIPS funds) puts the state on the cap table, and the 15% skim on Nvidia and AMD China sales swaps export licenses for tribute. The HN usual knee-jerk downvotes on anything about Trump admin criticism, just help normalize it.
would be cool if we didn' t reward companies with billions of dollars for offshoring production and labor to maximize profits at the expense of american jobs, and apparently, national security.
The stocks were not bought. Intel's board literally voted to give 1/10 of the company to the American government. Any sort of other take is propaganda. The claim that the shares were in exchange for grant money is false. Grant money is free and requires no payback. Congress authorized grants, not equity investments.
in a sense, although buy is not quite the right word. there were grants promised to chip manufacturers under certian conditions. trump decided to wave those conditions just for intel in exchange for 10% of the company.
> Does that dilute the share other intel stock owners have?
no, the shares were already existing and owned by intel.
It's interesting that Trump's announcement of this includes a claim that the government has acquired this 10% stake without paying anything for it. Of course, that's probably just bluster to impress the more impressionable part of his base, but I imagine Intel's CFO isn't going to sleeping well for the next few years.
No board seat or governance rights. What's the government getting out of this? Trump brags of a good deal? Might profit in the future? Or _actually_ although technically there's no governance, government might actually influence how Intel is run?
Besides politics and image, are there any benefits?
This is an absolute failure of free market capitalism. The company which was at the forefront of the entire stack for decades (hardware design, chip design, chip fabrication, software design), headquartered in the freest modern country, slowly turned into a husk unable to compete with upstarts on the other side of the world.
Why is it that a fab is so much more exorbitantly expensive to run in US than in Taiwan? Wasn't higher labour cost supposed to bring disproportionately higher productivity? Why did Intel not build ultra advanced fully robotic fabs? Where's the innovation? Why did no other competitor crop up in the US when it has been clear for a decade that Intel is lost?
Ahh, yes, conservatives please lecture me about the utopia of the free market and how those evil socialists that take control of the means of production just screw it all up.
Number 6934 on my list of "every accusation is just projection".
The Republican party of 2008 bears little resemblance to the one of 2025, especially on economic issues. Many in the party have changed their views over the last decade+ on industrial policy and the libertarian wing of the party has very little influence now. It's really a striking shift.
What remains of the "old guard" is, in fact, loudly complaining about this move:
I am a republican. I even voted for trump. I am categorically against this. In fact, he should be impeached for it, and I have already called my representative (a democrat) telling her she has my vote if she introduces articles of impeachment against him. This is a red line for me. My parents left a third world country to not have to deal with this shit.
For me as a vague 1920s maybe-the-SocDems, I see this as vaguely positive. A return to pragmatism from market dogmatism.
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.
Exactly! I know there's a lot of Trumpers/MAGAs on HN, so I'm sincerely asking them: How is this not the evil thing you guys constantly lecture us about (socialism!)?
Because they only lecture about socialism as a red herring. They only care about power and obtaining it. Fascists have no actual principles other than more power and hatred of others.
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.
If we go by Marxist definitions, universal healthcare, universal education, etc. are communism, not socialism ('to each according to their need', which I interpret as capacity to provide a return on an investment of resources by society in one).
We have really little socialism in modern society, instead we have market systems combined with elements of communism. The only socialist elements we have are copyright and patents (you get them for contribution, so it follows the Marxist maxim characterizing socialism 'to each according to his contribution').
It's really a strange thing that communism, this hypothetical post-socialist stage of development, is so easy for states to adapt and so uncontroversial that elements of it are implemented today on a large scale, everywhere from the US to Africa, when socialism which Marx imagined as the stage that would give rise to communism is a relatively small element of society. I suppose the software industry has eaten a lot of other businesses though, and that it in the end is dependent on copyright, so maybe we actually are in the socialist stage, only with large middlemen intermediating 'to each according to his contribution' part. Socialism but with capitalist middlemen.
Trump unitary executive privatized wealth fund using US taxpayer money.
And a free 747 that won't be useful or ready during this term, but hundreds of millions of taxpayer money will be poured into for the "library". The VC-25Bs were already under construction.
this is a step away from capitalism and it harms any startups destined to compete with Intel and discourages investment in the startup ecosystem that might compete with Intel, and punishes investors/customers in/of any of Intel's competitors.
Unless the descriptions of the deal I've seen are wrong, this seems random and pointless. No new money. A lot of the support for Intel foundry, and a lot of the people in that are gone now. So what's the national strategic interest in Intel? Pat Gelsinger must be happy he didn't stick around for this shitshow.
I'm all for the government getting stakes in companies that it invests in (see below), but I find it really odd that we already awarded this money to Intel through the CHIPs Act and, instead of disbursing the funds as a grant, they converted it into a stock purchase. I don't like that they're not going along with the law, although that's par for the course.
On getting a stake, I find it odd that the right wing (or at least Trump?) is all for getting stakes in businesses, as that seems so counter-intuitive to what they're about. Personally, I think that if the government is putting billions into strategic industries, taxpayers should get a financial return, not just vague promises of jobs or “competitiveness.”
I am surprised there is so much talk about China. Can we just focus on our own business here in the US: fixing the roads, bridges, schools, cities, etc.? Let’s make America greater first!
The French government owns stakes in big corporations. And why not, why wouldn't the public own some stake and government (us, in theory) have some control?
Airbus being an example.
Is it because Trump did it? If Biden had done it, the comments from the right would sound like the sarcasm in this message thread.
Trump's temporary, he's not taking his stake home when his term expires.
The issue isn't the US taking a stake in Intel. The issue is Trump running a protection racket where he threatens to use the entire force of the federal government against a corporation or institution unless they pay some very large amount of money. This is the same tactic he's using with universities and law firms.
I despite/abhor this administration and their politics, but this is a good move.
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.
No offense taken, my understanding of the term could was wrong. I hope it doesn't take anything away from my argument though. I think I wanted to use the term "deprivatization" instead, I only remember this topic distantly from reading about communism and economics.
I agree. He should take control of Tesla, OpenAI, Palantir and Facebook next. Then privatize some of the leading quantum computing companies. Why do we even need venture capital if we can just build out an Office of Strategic Investment and control everything from the federal government. \s
It’s super debatable whether or not DARPA has done more for creating enterprise value in the US tech sector than sand hill.
At the least, without darpa the whole Bay Area machine would not exist today, so it’s at least necessary if not sufficient.
Not just darpa but nih, nsf, doe, onr, arl, nasa, and the national labs are definitively necessary causal dependencies on of every company and industry driving US national pride and all of the most valuable companies.
Even if the firm never takes a grant, their talent, supply chain, and component pipelines all depend on these grantor agencies thoughtfully allocating taxpayer capital at the national level.
Slippery-slope fallacy. The money to buy shares has to come from somewhere and the power of the purse is with House of reps. Someone like Trump can (and is-per this post) take stakes in random companies, but that's our democracy. You wouldn't say "bomb canada, france, england and norway" because the military bombed one country right? You make sure congress checks and balances that power.
If the government takes over those companies and they don't do well, it means lost jobs which means lost elections too. There's a risk calculus to be had.
The current policy of never intervening or taking ownership in companies.. unless they are "too big to fail and start failing" only benefits the companies.
No, that was sarcasm that employed a slippery slope argument. I was not seriously suggesting that the federal government will buy Facebook. I was suggesting that we should avoid a pattern of behavior (slippery slope) that might lead to the socialization of other companies. Giving Intel a grant to keep it from failing is very different from demanding 10% in exchange for funds to keep it from failing.
Incredible how fast Trump is changing political culture - wasn't so long ago that protectionism, economic coercion, military-civilian fusion, state owned enterprise s was denigrated as 'communism' and hence beyond the pail. He's even mooted the possibility of redirecting tariff revenue directly to the people, an act of Chavez-esque socialism which would have been unthinkable a year ago. Anything can happen with this administration, I suspect that is the reason why the American people elected him
A government stake gives confidence in the company’s survival that a one-time cash dump for the CHIPS act couldn’t.
It’s not a lot different than what car and financial companies got in 2009. They were about to go under because no one thought they’d be around long enough to get out from under and deliver goods or pay their debts. The government stake enabled them to keep operating and eventually recover and then the government returned the stake to the market (or will soon w/ Fannie & Freddie).
Good. It's very much a "Heartbreaking: The Worst Person You Know Just Made a Great Point" situation.
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.
> Would you still be saying this if Intel wasn’t floundering as badly as it is today
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.
And fundamentally, I believe that any industrial stimulus should come with a mixture of government ownership as well as claw-back provisions should interests contravene national security.
Edit: cannot reply to you.
This deal literally comes with claw-back provisions.
The current deal comes with claw-back provisions, but I am more interested in the precedent it sets.
This plus the CHIPS+IRA has now set the precedent for states and the federal government to build an SDF. I don't trust this administration aside from a couple staffers, but this allows us in a post-Trump era to build SDFs and return to the industrial policy norms we had in the US before the 1980s with Reaganomics.
CHIPS and IRA themselves were able to be pushed by the Biden admin becuase Trump 1 set the precedent to ignore traditional norms.
The government support should have come in the form of a real competitor. Intel got this way because they had no competition - nobody thought a domestic EULV manufacturer would be an American prerogative in 20 years. All the customers for dense silicon were fine importing it from Taiwan.
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.
Given the circumstances and the relatively low dollars involved, it would be interesting to see the experiment: $10B darpa program
to establish a scalable fab ecosystem in 5 years via consortium.
This was how the internet was created, darpa stitched together dozens of performers to get the key ingredients (eg bbn gateways, academic subnets, experimental applications, protocol research.
They even led the last ditch marketing Hail Mary after years of no-one caring about the program besides the zillions of engineers from all around building it by organizing a press day in a hotel ballroom for a demo day.
As a taxpayer I’d strongly support 5B/.1% of the fed budget for a few years just to learn what happens in the attempt.
$5B wouldn’t be nearly enough to create a leading edge fab. Estimated cost for TSMC is $20B.
China has been trying and failing to build a competitive fab for years, has the rare earth minerals in its back yard, etc and can’t do it.
The second issue is, who exactly is going to use these fabs once they are built. One issue that Intel has is that its “customer service” sucks. TSMC will bend over backwards as a partner. No one wants to work with Intel.
Can you imagine Apple or Nvidia wanting to work with a government owned chip fab?
Do you apply the same standard to Nvidia, AMD, Microsoft, Amazon, Google and Tesla who are all trillion dollar market cap companies (besides AMD) who design their own chips and they are manufactured by TSMC - or for Tesla moving to Samsung
Deregulate RISC-V, threaten Intel with loss of IP if they can't profit on fabs, threaten to cut Softbank off of American companies if Masayoshi Son won't onshore RISC manufacturing.
There's soft-power coercion left on the table, the only thing we buy with Intel stock is a C-suite's dinner bill.
Ideally, a government or SDF holding is not a majority holding, but a controlling stake.
Generally, a SDF is expected to take decisions that help develop an ecosystem or market, and help act as a check against primarily profit-driven motives.
Assuming a stake is part of a well managed SDF similar to Temasek, Mubadala, or the Master Trust, then I'd tend to trust the decision being made.
That said, I also recognize that this administration is severely disorganized and amateur, so I wouldn't trust their choices. But, I do feel this sets a precedent to allow both the federal and state governments to build SDFs, especially in a post-Trump world.
For example, the CHIPS and IRA were able to be pushed thru by the Biden admin because of the trade norms the Trump 1 admin created and upended.
In general I would rather the government take a stake in corporations they're bailing out. I think the "too big to fail" bailouts in the past should have come with more of a cost for the business, so on one hand I'm glad this is finally happening.
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.
I’d really rather we didn’t bail out these companies at all. It clearly creates moral hazard and makes it hard for better run companies to enter markets.
While that argument makes sense from a purely philosophical perspective, it doesn’t hold water in the reality of this situation.
Nobody is entering the chip making business and growing to a size and scale to compete with Intel in 2025. If they collapse tomorrow there aren’t going to be startups filling in the gaps, there’s just going to be massive shortages of chips and chaos.
You are saying that if intel went under, Musk or some other wouldn’t buy the assets and have a go?
How is that not even worse?
...no? Did you see me say nobody would buy the assets in a scenario where Intel was actually going bankrupt?
I said if by some magic Intel ceased to exist tomorrow, there wouldn't be some startup just filling the gap. So the idea that government investment in Intel somehow prevents a startup competitor is just nonsense. To compete with Intel would require trillions in investment and probably a decade+ of time to build the requisite organization and talent.
The government investment to prevent the catastrophe that would result in them declaring bankruptcy and the subsequent breakup of their assets has no bearing on whether or not a startup could replace them.
If shareholders are losing ownership it's less a pure bailout and more a strategic investment and/or takeover. It also potentially lets the average taxpayer benefit rather than just those its directly propping up.
Here I thought the point of a grant/subsidy is that it allows companies to take risk - by setting up factories, funding research without worrying about the monetary cost etc.
Government benefits through one, generating employment - direct and indirect employment, raising taxes through personal taxes (indirectly impacting tax collection) or second the country being at the forefront of the innovation etc. That is how average tax payer was supposed to benefit.
But I guess trying to nationalize companies and "benefiting" from company profits was something people were missing. How did no one see that? Ah yes, third world countries try this routinely for "national security" and it always leads to moral hazard pointed out by the person above you.
> But I guess trying to nationalize companies and "benefiting" from company profits was something people were missing. How did no one see that? Ah yes, third world countries try this routinely for "national security" and it always leads to moral hazard pointed out by the person above you.
This isn't nationalizing it though, this is just an investment into it. Investments aren't bad.
Investments can be bad. The market efficiently destroys malallocated capital through competition.
The problem with government taking stakes in private companies is that it creates moral hazard. By taking ownership in Intel, the government has effectively "propped it up". This means that Intel competitors that made less risky decisions to remain solvent are now losing; their bet was Intel was operating poorly, and instead of capitalizing on Intel's downfall so they can fill the gap, the government has plugged the gap. This action distorts markets away from their competitive equilibrium. In the process it generates moral hazard and deadweight loss.
Investments by the government can make sense, but generally it makes the most sense when investments support public goods (arguably also when supporting goods/services that the private market would not). Cpus are neither.
Just like the SVB bailout, or Freddie/Fannie/Sallie establisments, this is bad.
How does the average taxpayer ever actually end up benefitting point blank?
Not that I agree with bail-outs, but 2008 financial crisis that resulted in a number of bail outs actually netted the treasury a profit.
> In total, U.S. government economic bailouts related to the 2008 financial crisis had federal outflows (expenditures, loans, and investments) of $633.6 billion and inflows (funds returned to the Treasury as interest, dividends, fees, or stock warrant repurchases) of $754.8 billion, for a net profit of $121 billion
https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
I don’t think that really counts if there has to be a giant campaign of quantitive easing by printing dollars alongside.
Was going to say, gotta check first how long that money was tied up for the profits to really mean anything. How well would that investment have done vs index funds or gold? Or what if you adjusted all dollars for supply?
The gov doesn’t invest in index funds or gold or in any traditional investor way outside of spurring growth.
We had that in 2020
Was that profit diverted from companies that were better managed and didn't get a bailout? We can see who won. Who lost? And why is the government deciding winners and losers? Why especially when the government is one of those winners?
To be clear, that bailout was passed by the Congress. This is a new phase of the President gets to just bail out anyone.
What do you mean? This action means Trump has removed a bailout. They were going to just give Intel a chunk of money. Now they aren't.
Profits from the stake lower taxes that would otherwise be levied on you? Of course that’s moot if the deficit isn’t something being taken seriously.
Deficits aren't real and 10% of $0 when they likely go bankrupt is $0
I think the government taking a stake creates additional moral hazard and invites corruption. The melding of corporate and government interests is a slope that is always slippery.
They aren't really losing ownership, they sold ownership at market rate.
> they sold ownership at market rate
No, they did not. The government paid less than Softbank that also just purchased a stake. Unless forced, Intel could have likely gotten a better deal.
This has worked REALLY well in countries like India. Where it resulted in the ability to be badly run, AND be excluded from market pressure. Which resulted in corruption and a drag on the economy.
There are governments which can take a stake and be ok, and then there are governments which are setting up to set money on fire.
I see two objections to this: The collateral damage to the surrounding economy (well ran companies might be dependent on Intel) and the loss of strategically important institutions and knowledge, especially in markets with a high barrier to entry. So I think bailing out can be justified, even if it is a clear moral hazard. The better solution I think is to prevent markets from becoming too oligopolistic and firms from becoming too big to fail. But this would require a government who isn't afraid of taking anti-trust measures to maintain market competition, but the US has been moving away from that model for decades.
Well as much as you don't like it, companies this big failing is terrible for the economy and in this case, national security to a degree. I'm of the thinking that when your company gets to a certain size we'd be well off nationalizing. Apple has more money than some nation states. Something that huge has the potential to affect global politics. There's lots of other reasons too, but this isn't like letting the corner store fail. The repercussions are huge. If we're going to bail out, the people should own some of it.
When a company “fails” it does not disappear in a puff of smoke. It goes into bankruptcy and is sold in parts. Some of those parts are perfectly functioning divisions which will continue to function but they will be owned by someone else.
I would rather have Intel go bankrupt, sell profitable pieces to private buyers, and if there are any pieces that are not profitable but crucial to national interests, create a company out of them and have the government buy them. This way you are not propping up a dysfunctional behemoth.
Things must die in order for new better things to take their place. This applies to companies as well.
> Apple has more money than some nation states.
And Apple needs their chips fabbed, so why not have Apple invest $50B into Intel? Nvidia could afford to chip in too. These companies that face a huge amount of geopolitical risk because they've put all of their eggs in the TSMC basket should have to pay for this not US taxpayers.
You’re proposing that the United States government force Apple to invest in Intel? Apple chose a different supplier than Intel; at this point it’s hard to consider Intel a competitor to TSMC but let’s pretend they are.
You have proposed a “free market” system in which if you choose the wrong competitor you can be forced to bail out the chosen one. The economics of that don’t work at all.
The free market is great if there are no discontinuities. However, being a greedy algorithm it's not great about planning ahead for things like geopolitical risk - such as some of the largest, most profitable companies putting the bulk of advanced CPU and GPU production in Taiwan. As such, if we're going to make adjustments so that we do try to plan ahead for potential disruption we need to incentivize companies that need fabs to produce their advanced devices to invest in some domestic production so that we're not over a barrel if China decides to invade Taiwan. I'd rather have Apple, Nvidia, AMD, Broadcom, etc. make some investment and take some ownership in Intel than for the US government to do it. This is essentially what Craig Barrett has been proposing as well.
If TSMC diseaper tomorrow, people will still buy computers, with chips made from Korea, or China, who cares. What are apple or Nvidia risking? They have worked hard to lock their customer. The problem is for the US military.
Apple & Nvidia switching to, say, Samsung as their foundry would likely take at least a year before they'd start to see production. Meanwhile, little to no revenue. It is a risk for them. And if China went for Taiwan, why not also cause some trouble for S Korea while they're at it? (Wouldn't have to invade, just block shipping, etc. - if China decided to do maximal damage. It's also quite possible that N Korea would take advantage of the situation)
I think it would be shorter, they work with Samsung to evaluate their option. And if China did went after TSMC (Taiwan and us) plus Samsung, Nvidia can still switch supplier (Intel?). The risk (let's say one year revenu) isn't worth joining the fab business. They have seen what happened to Intel and AND. And they know China will have good fabs in not too long. Nvidia true competitor is apple, and they are in the same boat.
I'd rather the citizens control the companies than the other way around.
Branding nationalizing companies as “citizens control” is quite the spin. Chinese citizens surely own the means of production, right?
I suppose that depends on whether said country is a democracy where citizens control the government or a dictatorship where they do not.
Nationalizing a company isn't communism and isn't intended to resemble it.
How is that not common/collective control of the means of production?
What would common or collective control mean? If everyone held "control" in common, it wouldn't be possible to do anything.
It is possible to nationalize a company, though. For example, Saudi Aramco is owned by the state.
How is that not common/collective control of the means of production?
1. A central government taking ownership of a company in lieu of everyone owning a share. 2. It is.
Indeed, it’s actually a horrific non-communist pro-capitalist version that leaves citizens much worse off - see “bailout socialism for the rich and rugged individualism for masses”.
> I'm of the thinking that when your company gets to a certain size we'd be well off nationalizing.
The public sector is great at two things: (1) getting literally millions of people to show up to work and do well-defined jobs (i.e. nothing outside the lines) that do not change from year to year, and (2) dumping billions into research, with very little of (2) affecting (1). Critically, the public sector has extraordinary difficulty with the agility needed for iterative product development.
If companies get to a certain size and their day-to-day operations are more-or-less fundamentally the same year-after-year, yeah there's an argument for nationalizing them. You see this in arguments to nationalize segments from oil refineries, apartment construction, and airlines. There's something coarse about caretaker CEOs and private shareholders getting rich, instead of the public purse, off the economic rents thrown off from a mature machine that doesn't have much more, if any, room for growth. But the key question is whether the potential for growth has been fully exploited or not; if it hasn't been, then the government certainly won't succeed at exploiting additional growth, and it's better for the company to stay in private hands, which will be motivated to privatize the wealth from achieving that growth, and the government will be paid more in taxes if they succeed.
That's why I'm not convinced chip manufacturing is there when there is still yearly research into reducing process sizes. Maybe there's a case for nationalizing the foundry lines producing older, larger processes that are used in current weapons designs, but that's not the case for nationalizing the whole company.
How is using tax money to prop up uncompetitive companies good for national security? Wouldn't it be better to replace them with competitive companies? It's super hard to be successful when your own government in backing the competition.
You can't build a new Intel. That would take decades. These aren't startups. They are massive fucking machines that can't just be disassembled and put back together by someone else. So the idea is to control them and get them back on track to better serve the collective interest.
You do that by letting them fail.
You let them fail because that ensures that everyone else in the economy fixes their shit and stays competitive. America developed more world class successes, by getting out of the way and letting badly run firms fail.
Especially since NVIDIA is a competitor.
Intel failed because the Taiwan government started tsmc and supported an amazing business model that turned out to be perfect for SC manufacturing.
Unfortunately, this is in a country that China is threatening to takeover while building the largest bomb shelters and field hospitals right across the strait.
China is forcing us to invest kind of like they are forced to prop up Huawei to make GPUs for deepseek. Conflict makes irrational actions happen.
> Intel failed because the Taiwan government started tsmc
Not true. Intel failed because it failed to deliver its own products on its own timelines.
TSMC was behind until Intel failed on its own. No government’s involvement changed things.
You can't build a new one so you keep the old one on life support? This makes no sense. The old Intel is not the right choice. How many decades do you think it will take them to recover if you don't clean house? How many decades has it already been? The later you start the longer you remain vulnerable to foreign competition.
You wouldn’t have to build a new intel. Their IP, infrastructure, and even the individual talent pool won’t simply disappear. They can either get redistributed into more competent companies like their competitors or restructured into a new venture. The only losers would be the current shareholders.
> or restructured into a new venture
Isn’t that exactly what the “too big to fail” bailouts were, in practice?
They did it with rail before
US needed functional railroads and they took over the rr companies.
As a non-American, a big part of the appeal of American companies was their independence from the American government.
Was.
Then as part of the bail out break them up so that they're no longer too big to fail.
Chip manufacturing is too important for the US. We can’t be completely dependent on Taiwan. Nothing against Taiwan, it’s one attack away from being obliterated by China.
No company is going to come out of someone’s garage and build a chip fab.
We can definitely offer subsidies for manufacturing in the US - we've already gotten TSMC to open several fabs.
> We can definitely offer subsidies for manufacturing in the US
The very subsidies Intel now has to pay with shares for? How is that a subsidy? Companies now and in the future would be very concerned before taking any US subsidies because the terms can always change after the fact.
Are we so sure Intel sees this as a bad thing? The US now has even more reason to prop them up.
Yes, does it matter if there are more reasons? If you want to do something, 1 is enough. The rest are excuses.
And it’s still owned by a foreign country and Taiwan is restricting TSMC from manufacturing their most advanced processors from being manufactured in the US.
https://www.tomshardware.com/tech-industry/semiconductors/ta...
Same as the US is restricting sale of Nvidia chips to China.
this is not to say that intel will be manufacturing competitive chips to what TSMC is.
are you worried that china will invade taiwan, and then somehow taiwan will still be around to prevent the US fabs from making the best chips?
its a bit far fetched
If Intel isn’t manufacturing chips, what US manufacturer comes close? You can’t just build a close to leading edge manufacturing facility in a month
it's not like the technology to produce these chips are a drop-in replacement
the threat Taiwan faces is existential, and one of the only things that the US has at stake are these chips
So we give a bunch of money to a company with a history of mismanagement and out sourcing chip manufacturing?
Nobody is going to swoop in and buy a distressed company that owns a bunch of fabs then turn it around if that company keeps getting bailed out.
Right it would make a lot more sense to let this happen and then restrict that the buyers be American (or European, I guess).
Nvidia has a market cap of 4.5 trillion dollars and everyone is committing hundreds of billions to AI CapEx in their direction - they can afford to organise chip fabs if it really came to it. Ok TSMC and ASML would need to be on board but it could be done. Should be done in fact because even a simple SWOT analysis would show the risk to their business.
No amount of money is going to create a new fab in a reasonable timeframe.
You can buy one, if a suitable one exists, but there isn’t spare stock sitting around; the lead time is long, especially for high end nodes.
If Taiwan becomes practically inaccessible, is there any way another country can setup a competing fab (for the latest generation of chip sizes) without years of R&D? As far as I understand, the practical knowledge of how to do it doesn't exist right now. (Neither does the prerequisite tooling)
Given there’s fabs doing essentially the same thing elsewhere then yes. Getting down to 3nm and the technology and secrets that involves would take a while though.
TSMC can’t do it either without xUV lithography machines made by ASML in the Netherlands.
Furthermore there isn’t anything magical about about the current generation of chips that couldn’t be replicated at at a scale of 12 or 15 or 20 nanometers - it’s just that scaling down to that small allows for a greater density of transistors per wafer and thus increased power efficiency. An AI supercomputer could be built with chips with bigger transistors than 3nm it would just run hotter.
And investing in intel aside, one of Nvidias great competitive moats is CUDA and that’s software not hardware.
I meant specifically for a given small size. Sure larger ones can be and are produced elsewhere. But how many years behind is everyone else if they can't get any help at all from the current companies.
Aren’t the actual machines used in the fabs still made in Germany?
What is the risk for Nvidia if TSMC diseaper? Wouldn't they simply switch supplier and pick the second best option?
Then they'd have to use Samsung or Intel. Both are a bit behind TSMC, but the main issue is that TSMC has a massive amount of capacity so chips would become very, very expensive.
GPUs would go backwards a few generations for 5-10 years. Also supply shock on other industries would double the prices of chips for vehicles. Eg covid 3.0
That would not only be incredibly expensive, but there would be a period while quality catches up.
"Someone's garage" is a straw man. There must be people here who could, with adequate funding, build a smallish but viable chip manufacturing company.
I’d love this to be true but the tech involved is Sci-fi level stuff. Neutron beams used to chop off atomically perfect slices of giant silicon crystals and wacky stuff like that.
TBF garage fabs -are- a thing but it’s in the hundreds of nanometers scale. Thin film technology is also promising for low tech tape outs, but neither of those is going to be practical for anything better than 1980/90s tech. A modern die would be in the square meters range on those process densities, and could never achieve ghz speeds.
That said, there are a ton of scrappy companies sending out designs to 30-100nm scale fabs, companies with 5-10 employees cranking out cool designs and custom silicon… but they are still sending their tape-outs to giant companies to fab, just on their old, obsolete machines.
Silicon foundries are incredibly capital intensive, and short SOTA process lifespans burn through that investment at a frantic pace.
I think one of the people who got closest to that was Sam Zeloof.
He kind of had everything going: extremely clever and motivated, cooperation with his parents (who also worked in the industry), access to equipment. Kind of hard to improve on that.
He was able to replicate most of Intel's SOTA process... from 50 years ago. That's more than almost everyone else has managed in their garage but that's about the best you can expect without insane capex and ramp up (and again, it's not like he didn't have access to capital, it just wasn't monetary.) Even still it took five or so years to work everything out.
The SOTA today is really kind of insane. It's right at the frontier of what all of humanity is capable of. Of course as time goes on we'll push that out and today's SOTA is tomorrow's commodity but that won't change everyone's concern with being unable to replicate the contemporary best process.
The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
> The reality is all our "defense" needs (and arguably most other needs too) are far more than adequately met with processes a decade old now. It's really not the big deal everyone makes it out to be.
Right, this is why I think in-sourcing chip manufacture is totally viable (that is, if we were actually interested in that and not just using it as an excuse for corruption). The interesting exceptions I've heard about are things like, IIRC, high-power local AI for autonomous drones. But for SAMs and such, old tech will probably do it.
Sadly no. There isn't really a single person who understands the entire SOTA chip fabrication process in enough detail. Think thousands of material science PhDs with master and apprentice style relationships inserted at every level of a massive tech tree.
It's not like you can just look at the plans for a chip fab and copy/paste it into a new location and hire people to fill in who will have any idea how to work it.
There is no such thing as a “smallish” chip manufacturer that can manufacture leading edge chips. It’s about scale.
If it were that easy, Apple, Amazon, Google AMD, Nvidia, etc who all design their own chips would have done it.
Flip side: why would Apple, Amazon, Google, AMD, NVIDIA etc build their own when they can outsource it cheaper?
Companies are run to make a profit… they don’t care about sovereignty as long as the money is coming in.
Because it’s extremely lucrative and strategically valuable to the US
> Because it’s extremely lucrative
It could be extremely lucrative if they get it right.
Simply trying to copy TSMC would also be a poor strategy.
Companies have "core competencies" (or should). The manufacture (not design) of high-end silicon has never been one for any of these companies except Intel, and they have just lost big time.
> strategically valuable to the US
Yeah, they don't care.
… but the shareholders are global?! That’s not really a compelling argument unless you made it a requirement that all major/strategic companies must have 100% domestic ownership!
BUT - all you then need to do is create a Delaware LLC that buys the strategic stock, which is owned by $SCARY_FOREIGNERS
I agree but by the same logic intel could have done it and didn’t manage to so far.
Intel couldn’t because the science is too hard to do with the scale of only your own designs. Intel had to stop competing with their own designs and open up their fabs like tsmc.
It is not a straw man.
There is no amount of scrappy cleverness that gets you from zero to manufacturing cutting-edge chips without shitloads of capital investment, years/decades of R&D, a huge manufacturing workforce, and big contracts.
There's no such thing as starting small and scaling in that business.
You don't think $8.9B would do it?
This link contains a graph of fab costs over time. It looks like 9 billion might get you a cutting edge fab 15-20 years ago. but that's just the fab.
https://semiwiki.com/forum/threads/how-to-build-a-20-billion...
TSMC has already put $65B into the Phoenix fab and is adding at least that much more, so no. You're off by an order of magnitude.
TSMC's estimated costs in 2020, were $12 billion for their first fab. In 2025, their updated estimates were $65 billion for the first three fabs and $165 billion for when they get to six such facilities. So, $8.9B is a lot of money, but isn't anywhere close to getting to the equivalent to what TSMC has in Taiwan.
> getting to the equivalent to what TSMC has in Taiwan
That wasn't the question. The question, at least for me, is can you build non-zero chip production, enough to start building out a sustainable business. Obviously you're not going to compete with TSMC on day one, but there's a wide spectrum between that and "garage".
How would you build a sustainable business based on old processes though? The only reason fabs exist that use old processes is because they were once new processes, and once they've been built you may as well keep them running for a while. Building a new 50 nm fab would never be viable.
Those old fabs are still able to be useful at all because most applications don't need cutting edge chips. Chips have been Good Enough for decades. And again, if the goal actually is manufacturing independence, buying local chips that are a bit more expensive is totally worth it.
China tried to do it, and they aren’t even close despite their massive state subsidy programs, so no.
Intel is the number one chip contractor for the US military. There's no scenario today where the US government allows Intel to go down.
Why is this so hard for people to understand? Intel for years had a massive lead in the market. Instead of investing in the business the clevel suite instead opted for idiotic stock buybacks.
The only good news is that C-level suite can continue to do the same shit over and over again.
The government took 79.9% of AIG in that bailout - which was the biggest of the "too big to fail" bailouts from the past. People seem to forget that the owners of these companies that were bailed out got almost completely wiped out and instead focus on management compensation (which famously stayed high).
One challenge with the government taking large ownership in private companies is that it creates an opportunity to offload the ownership later, and that offloading might happen during a different presidential administration from the one that acquired it, and the offloading process can also be an opportunity to enrich someone else.
One example that comes to mind is the current Fannie Freddie Mac.
That's an over simplification. AIG was bailed out. And it's investors were wiped out. But AIG owed a huge amount of money to banks and investment firms that had enormous benefit from the bail out. Those are the people who paid no price.
If a company has truly become too big to fail that it makes sense for the federal government to bail them out, then why are we even leaving the welfare of the company up to private industry in the first place? It's just asking for ways to siphon taxpayer money out of the government through their willingness to buy shares. It inflates the stock price because it shows that the government might buy more share in the future at market rate. Its operations should be required to be more transparency, since if they're large enough that their failure would dramatically impact the welfare of the whole country, their operations should be subject to more direct democratic will (at least, more direct than the many steps removed from what is happening to Intel).
Intel is public and their financials have indicated this would happen. Even at my most irrationally exuberant their stock buybacks didn’t make much sense.
I’m not sure what “more transparency would look like to you, but publicly traded companies with audited financials are quite transparent. As for the part about siphoning money, history has shown that taxpayers do well. In 2008, the US government took roughly 80% of AIG, sold off their stock by 2012, made a roughly $15 billion profit and AIG is no longer considered too big to fail. It worked and did what it was intended to do. There are reasons to be positive about this.
Don't forget that the US government took roughly 80% of AIG in a move that was later declared illegal and made a roughly $15 billion profit.
> in a move that was later declared illegal
To be fair, a lower court ruled it “illegal exaction” but awarded $0 in damages as the illegal exaction prevented bankruptcy which would have zeroed out the investment anyways. Then the Federal Court of Appeals tossed that ruling as the plaintiffs did not have standing to pursue action.
There is no current ruling that the acquisition was illegal.
Maybe part of a bailout should be IP release for free to American companies. And the same would be true about a bailout of Boeing (for example). Make it easier for other companies to compete and eventually reduce the risk.
Maybe. I have worked in the corporate world for decades. My partner works in the government. My perspective is that the government office wastes so much time (and therefore $$) that I often have to keep my mouth shut to maintain peace in our relationship. There is no “disagree and commit” mentality. More like 9 months into a project and someone starts to feel “uncomfy” about something and we’re back to the drawing board.
I do believe the government is in a better position to provide services to the poor, but they are in no way going to be cheaper in the long run.
That being said, I do live in Seattle, which has a particularly “bogged down” government. Look up the “Seattle process” for some horror stories
The government is not 'bailing' Intel out. Intel's CPU business is profitable. Their manufacturing is not. America gave intel grants to build better manufacturing to secure America's national security interests. Congress did not authorize any acquisition of Intel shares.
All the talk about this from a business / investment side leaves out the simple fact that this is not actually authorized by anyone with the power to actually do such a thing.
Essentially, the government, elected by the public, voted to offer grants to intel, and then intel shareholders woke up today to find their equity had been diluted.
Are you sure congress didn’t authorize this ? i.e. actually specified that the money could only be used for grants and could not be used for equity purchases?
> The Department of Commerce is authorized to provide funding in various forms, including grants, cooperative agreements, loans, and loan guarantees, in exercising its Section 9902 authorities
https://www.congress.gov/crs-product/R47523
AFAICT the relevant section of law says it is up to the Secretary of Commerce to determine the funding type to be used for the semiconductor financial assistance
https://www.congress.gov/116/plaws/publ283/PLAW-116publ283.p...
See my other comment : https://news.ycombinator.com/item?id=44995799
It's not otherwise related to all this but a real bug bear of mine is that municipalities don't get part ownership - along with controlling rights for matters like sales or relocations - of sports teams when we subsidize their stadiums through taxes.
The municipalities could negotiate for those rights when they agree to pay for the stadium. It's on them if they risk it.
Organizations such as the NFL forbid it, only the Green Bay Packers are grandfathered in as an exception. Owners are encouraged to threaten moves. Collective action is needed to undo the race to the bottom.
No collective action is needed. They can just refuse to fund the stadium if they can't get a good deal for themselves on it. But maybe the people living there really want the stadium despite the risks, so in that case it's fine. They're getting what they want.
I think it would've been much better to incentivize the likes of Apple and Nvidia to make investments in Intel. They need to have their designs fabbed, they have a good amount of geopolitical risk. They also have a lot of money on hand. Didn't Apple say they were going to invest $600B into the US? (not that that's really going to happen), ok, so why not put $50B into Intel?
Because that is not a good use of Apple’s $50B.
Their dragon’s hoard of cash is only being used for financial engineering.
Their finance team axed a meager $10B dollar investment to improve Siri thereby making Apple the laughing stock of the tech industry players who say they are working on AI.
Oh, Apple definitely has problems but putting $50B into Intel doesn’t sound like a good idea.
Government shouldn't bail out anyone. Period. It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote. It is done all the time. That is what happened with the CHIPS Act.
The moment 10% stake was announced this became political. While the stated reason might be national security etc, in reality something else might be at play.
One, this government and its supporters have been talking about government "wasteful" spending. So, a stake shows that they got something in return for that public money. The money is now "well spent".
Second, it helps boost the political "dealmaker" image of POTUS and we all know how much he cares about his image.
Except if Intel goes there’s no leading chip manufacturer left. You can’t just (easily) tax cut your way to having that concentrated knowledge and market position.
It's like you intentionally chose the ignore other government actions and focus on taxes just to fit your narrative. Read it again:
> It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote.
And read the announcement again. Intel has not been given extra money. CHIPS Act money has been converted to stake. That means Intel wasn't going away, if that is your concern.
Government routinely provides grants or preferential treatments to certain sectors or industries. Like Tesla and the EV grant. That works fine. It doesn't mean government needs to acquire stake in Tesla and put their thumb on the market scale.
In case you miss it, let me repeat - industries needs to be supported. It is called CHIPS Act not Intel Act for a reason. Given the current POTUS propensity to hold aid/grant without a quid pro quo, we can guess what happened here. Intel doesn't gets the grant money unless they kiss the ring and polish POTUS' image.
“Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.”
I’d encourage you to “read again” the HN guidelines.
> Government shouldn't bail out anyone. Period. It should enact preferential policies like grants, tax cuts, subsidies etc. for industries they want to promote.
If Intel is at risk of going under, saving it is what’s understood to be “bailing out.” A grant that’s meant to save a major multi-billion dollar company isn’t quite what most people think of as a grant.
In the end, it turns out that people didn't dislike Chinese policies of nationalized industries. They only disliked that the Chinese were doing it.
I can't wait for the "I don't think social credit scores are a bad idea. Cancel culture is good actually".
"People" you are referring to want a level playing field. If the Chinese government is tilting the field, there aren't a lot of good options. You can either watch the Chinese subsidize draining most productive capacity from the rest of the world, erect trade barriers (my preference, but it would require cooperation with other countries, which... ain't gonna happen for a while now), or try to tilt back.
If you truly think Chinese subsidies are artificially depressing prices, then just buy Chinese goods to take Chinese’s people’s hard earned money.
Are you unfamiliar with the concept of cornering a market? Sure, uber was offering lower prices subsidized by VCs until taxis were driven off. After the fact they raised prices back up. Or what Amazon did with diapers.com? It is not wise to let your geopolitical foe gut the productive capability of your economy. It’s how America took over dominance from the UK by taking over the high tech business of the day back then (textiles).
It’s fine for the consumer in the short term but a flawed long term strategy.
Uber lost $31b. They make about $4b/year in profit now. It'll take them 7 years to make it all back assuming they don't grow anymore.
$31b put into S&P 500 would have netted investors are more in return over the last 15 years. So honestly it was a bad deal.
And let's not forget that Uber can be killed by self driving cars.
That’s like claiming that Amazon is a bad investment because they weren’t reliably profitable until 2015 and only had their first profitable year in 2003. The part you’d be missing is that they were reinvesting all their profits into the revenue growth machine. These past few years is actually the switchover point for Uber when growth seems to have leveled off more.
It’ll take them 7 years to make it back and keep generating for even longer. Whether or not self driving cars kills Uber will depend on how well or poorly they’ve diversified their business model.
But headwinds and risks are true of any business. You’re missing the larger point I’m making that investors and business people frequently do loss leading as a tactic to kill off competitors and once the competitors are gone they can milk the market. Whether or not it’s an effective strategy doesn’t matter - can companies are not coming back no matter what happens to Uber. Similarly, local industries that China kills won’t come back no matter what happens with China.
Also as a final nit - the data I’ve looked up suggests they only lost 16B since founding. This halves the payback time to a few years and then every year after that is many billions in profit.
Uber lost $31b. They make about $4b/year in profit now. It'll take them 7 years to make it all back assuming they don't grow anymore.
$31b put into Nasdaq would have netted investors $300b before dividends. So honestly it was a bad deal.
And let's not forget that Uber can be killed by self driving cars.
Yeah sure but then you do it properly. Why did Trump have to coerce them into the deal (by threatening to fire the CEO)? Just imagine what's going on behind closed doors.
There is no social credit score system in China.
I don't even think thats a joke. Trump doesn't dislike cancel culture, he just wants to be the one doing the canceling. And credit scores? You are already half way there with the way the government is acting.
The government should avoid bailing out big, uncompetitive corporations. If the government is acting as lender-of-last-resort in some crisis, then it should demand senior debt to that it gets paid back before any shareholder.
I think it's a good choice for Intel as they are one of the very few who own fabs and fabs are extremely valuable pieces of equipment. Just because of 3 consecutive annual CPU "bugs" in essence, they should not shut down forever. Try try again.
The heavily criticized auto bailout was precisely this way and actually turned a profit once the government sold its stake. This is different and I can’t imagine the government will ever sell its stake.
Did it turn a real profit or a nominal profit, I wonder? I remember hearing a brrrr sound around that time.
I was wrong. The $80B TARP program lost quite a bit of money on GM. The program overall lost $9B while saving millions of jobs and stabilizing the economy.
But it still took a share in companies that participated in TARP which is why some payed back the loan instead of letting it convert into ownership shares if I recall correctly.
Government is starting to be to big to fail. Living in the Great Lakes region its just the reality of it, as the geopolitics of the region are outplayed by idiots in other parts of the state.
What bothers me is the double standard.
When the public asks for fully publicly-owned railways, universal healthcare, or any basic social safety assurances—“socialism”.
When a megacorporation struggles, immediately to the rescue.
Bailouts aren't following some rules of fairness, they're for specific reasons like preventing greater economic problems (2008) or national security (probably Intel). You might disagree that those are the best ways to address those risks but that's why we elect the government to make those decisions and act on them instead of letting the country collapse - which is arguably more important than social services which won't really matter if there's no money to fund them or the country has been taken over by some hostile enemy.
Is like the country is not already collapsing due to lack of social services compared to the supposed enemy which already has higher lifespan while having 10x lower gdp per capita.
Not a serious problem in the same sense that a military conflict would be. Different categories and different concerns.
The US is not “collapsing” and we have plenty of social services.
Our lifespan is lower because we’re fat.
And because of gun violence.
Isn't that because of deaths of despair, namely by drugs? Why are there so many desperate people in the US if the country is doing ok?
That’s fine. But when the gov is picking winners and losers, that not a free market. What it is, it is. But it’s not a free market based system.
> Bailouts aren't following some rules of fairness
And people wonder why populism came back. Huge transfers of wealth aren't about 'fairness', its about preventing greater economic problems that the people who received the bailout say will happen if they don't get bailed out.
At the end of the day, this line of thought is going to fuck over the country far more than any depression would.
It's the same line of thought that says countries should subsidize local agriculture. The alternative would be greater specialization in food production and greater risks if those specialized countries fail to provide for their dependants. No doubt there's some influence of farmers trying to get wealth transferred to themselves but that doesn't mean it doesn't also benefit the rest of the population.
One big difference is management control. People feel that government administered services tend to have poor management and citizen services more often than not. One big example is the DMV since almost every has experience dealing with it, long queue times are almost universal because no one gives a crap and it's very hard to fire a government employee. Or the passport issuance, or applying for permits. Or unemployment benefits, the list goes on and on.
Imagine if the DMV and passport services had even the possibility of competition like a private company has. You bet all of a sudden the service would get much faster and better and with fewer mistakes and red tape with the same or fewer number of employees. Or someone would set up a competitor and imagine how many people would even pay extra just to not waste several hours of their time.
It's tax payer money so there is a lot more waste than even at big private companies. For example, the costs to just administer and operate the social security administration(not including any money paid out to recipients) is $15 billion dollars with a big B. There is no incentive for anyone to save the tax payer any money and there would be a huge pushback from govt contractors, unions and employeees. See how much hate DOGE gets for even proposing cuts or higher efficiencies.
Any large IT project in the government in almost any country and at any goverment costs huge amounts while not returning much value if any. Look at the state and costs of local metro stations and trains in almost any city.
That's interesting example to choose, as I've actually heard often that the Social Security administration is an example of an efficient government administration.
For example, a quick Google search shows administrative overhead as around 0.5% of benefits: https://www.cbpp.org/research/social-security/top-ten-facts-...
Just one instance.
https://fedscoop.com/problem-project-threatens-progress-soci...
> The program, called the Disability Case Processing System, or DCPS, was designed to improve case processing and enhance customer service. But six years and $288 million later the program has “delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns
For the main system they're still using COBOL, which has no Date data type, causing issues even in 2025.
> See how much hate DOGE gets for even proposing cuts or higher efficiencies.
I don't think many people believed DOGE was ever intended to improve government efficiency in any real sense.
> See how much hate DOGE gets for even proposing cuts or higher efficiencies
I think you should be aware that “proposing cuts” is not why people why DOGE got hate. I find it disappointing that serious people believe that.
Well, my local DMV is much more efficient and friendly than the private health insurance company I have to deal with.
But part of that is lack of competition. I can't really switch to a different insurance company, because the one I am with is heavily subsidized by my employer.
In my entire life, I spent much less time in DMV offices than on the line calling AT&T's customer support.
USPS has also been great overall.
I switched away from AT&T. You even keep your number. Switching govt services not an option unless you take more extreme measures.
> USPS has also been great overall
USPS is an independent agency which is funded by its own fees charged to users, not taxpayer money. It's not like the other agencies.
From Wiki:
> The USPS is often mistaken for a state-owned enterprise or government-owned corporation (e.g., Amtrak) because it operates much like a business
It's also far from a monopoly unlike most other govt agencies and has competition in the form of UPS, Fedex, DHL, Amazon etc.
So it's not surprising that it runs better, if it loses user fees, it directly affects the bottomline and thus would have to downsize, no blank check from the taxpayer like other agencies have.
> I switched away from AT&T. You even keep your number. Switching govt services not an option unless you take more extreme measures.
I can vote for a politician to fix the government services. And the local politicians know that keeping the government running well enough is needed to be re-elected.
I have zero leverage on AT&T.
Some services can be government-operated or private. Trash collection is one of them, for example. I lived in many cities, and municipal trash collection companies were always better and not any more expensive.
> I can vote for a politician to fix the government services. And the local politicians know that keeping the government running well enough is needed to be re-elected
That is one issue among several reasons to pick a politician. Also politicians have limited powers to fire non-performers which gets bogged down in the court system to fire just one person.
> I have zero leverage on AT&T.
People can switch away easier from companies, it happens all the time, companies lose and gain customers all the time. Bad or mediocre service has killed many companies, the effect is far greater than on governments because they get to fund themselves from you even if you don't like or want them. Govt is the ultimate monopoly.
How do you switch away from a company that has a monopoly in your area?
And BTW, I agree that Social Security overhead is unacceptable. It should be privatized and increased to at least $500 billion to be comparable with health insurance companies.
It's not acceptable at all to make private companies look bad.
If it was a company it'd have failed already.
> The program, called the Disability Case Processing System, or DCPS, was designed to improve case processing and enhance customer service. But six years and $288 million later the program has “delivered limited functionality and faced schedule delays as well as increasing stakeholder concerns
https://fedscoop.com/problem-project-threatens-progress-soci...
And that's just one instance.
Can you imagine raising $288 million from VCs for a software application while delivering so little?
But taxpayer money? Free and easy money to keep wasting coz no one cares. Tragedy of the commons.
For the main system they're also using COBOL, which has no Date data type, causing issues even in 2025.
Startup companies blow through hundreds of millions of VC dollars with little to show for it all the time. Theranos raised $700 million for a technology that never worked. Plenty of others wasted hundreds of millions building half-baked products that nobody wanted or that made no business sense. Remember Quibi?
The difference is that those companies eventually fail. The govt has essentially limitless taxpayer money behind it(till a currency crisis like Argentina, Greece etc. happens taking down the entire economy) because paying it is enforced by threat of violence and it can borrow and print money as much as it wants with deficit spending.
Also Theranos was aiming for something very innovative that still does not exist, whereas the govt IT systems are essentially glorified CRUD apps(no doubt complicated and with tricky integrations and need for reliability and security). It's an example where VCs could've exerted more scrutiny but chose not to and wasted their own money, hopefully a lesson learnt. As taxpayers, we have far fewer options, we cannot just pass on paying out hard earned money if we don't want to "invest".
Another example, the Queensland payroll system cost $1.2 billion over 8 years to develop, repair and maintain, to pay just 87K people. The initial estimated budget? $6.9 million.
> Also Theranos was aiming for something very innovative that still does not exist, whereas the govt IT systems are essentially glorified CRUD apps(no doubt complicated and with tricky integrations and need for reliability and security).
I worked both in the area of molecular biology and bioinformatics with some pretty nifty technology (which was later acquired by a large company). And in the area of giant ERP applications that are nothing but tons of boring forms.
I can confidently say that the complexity of ERP apps dwarfs anything that is needed for molecular biology.
>Can you imagine raising $288 million from VCs for a software application while delivering so little?
Yes, absolutely. I think you might be overestimating VC’s a little bit.
It can happen yes, but VCs have very strong incentives to not waste their own money, if they feel like putting the effort into it. If they fail they may learn the lesson not to waste money, or even end up not having money to waste. In the government all the incentives are the opposite, to keep spending money or the budget would get reduced next year. If anyone tries to save costs, they make a lot of enemies both within and outside. They get nothing if they succeed, so the incentives are bad.
I think you may have a flawed understanding of how VCs work. VCs generally care little for one company does. That’s what the whole “invest in 500 startups” strategy is about. Now a $200M investment probably starts to leave that range and enters the “throw weight around to win”, but generally they care little about the software except as a means to an end to get returns and business growth and software value are only loosely correlated.
> Can you imagine raising $288 million from VCs for a software application while delivering so little?
What? You're imagining VCs caring about pizza money? Should I mention, perhaps, the AOL-TimeWarner merger? Or maybe AT&T buying DirecTV for $50B and essentially giving it away for $8B?
Heck, I was a part of an utterly failed project with a $150m budget (in 2005), in a large European company.
> For the main system they're also using COBOL, which has no Date data type, causing issues even in 2025.
And? They haven't missed a single payment day in all their existence, moving data between multiple types of media. While working with staff levels that won't even qualify as "skeleton" in plenty of companies.
> Heck, I was a part of an utterly failed project with a $150m budget (in 2005), in a large European company
Was it a just a somewhat complex CRUD app like the SSA example or most govt IT projects? Or were you guys trying for something more complicated and innovative and failed?
It was an ERP application from a large three-letter European company. In other words, a CRUD app with lots of UI forms. Nothing innovative or particularly interesting.
The hardware to deploy it was alone a couple of million. At least, I got to play with some rather cool gear (for that time).
> One big example is the DMV since almost every has experience dealing with it, long queue times are almost universal because no one gives a crap and it's very hard to fire a government employee.
I don't know what's wrong with the US, but here in Poland, there are hardly any queues at the (equivalent of) DMV. And we're nowhere near US's wealth levels, so public services here (in Poland) should be worse, not better. There's something very wrong in how the US is organizing its DMVs, if the queues are such an universal problem. But, it's not an issue with government services per se, just with this one instance of government service.
It’s not a double standard, you just don’t understand the standard.
It’s a triple standard you just can’t count.
But that wouldn't give great ratings.
They're converting a grant, so Intel is worse off due to this move.
The only real benefit I can see is it looks more revenue neutral because the government getting something of value and Trump is unpopular for spending so much money on unfunded tax cuts.
It is going to help ensure that Intel doesn’t just waste the $8.9B they are getting
I actually am interested in the government having a voting share in big companies. They have an interest too, and seeing what it is is neat. Basically, I see this as bringing certain dealings above board.
I think I agree overall, but "these kind of deals should be boring, not a media event" make me doubt that position, because "deal becomes a media event" seems so eventually-inevitable given how democracy works.
The “our president made a deal!” part of it makes me skeptical of actual long term patterns past a Trump administration.
While not walked back completely, a lot of what Trump does is minimized and scaled back after the initial theatrical moment. Still in a bad place, but usually some TACO moment happens.
And then, in the end, it’s some executive action that lasts as long as the current president is in power.
Democrats will not walk this one back. Having a stake in a hugely important industry is valuable. Being able to directly shape Intel's path is going to be historically important.
Right because capitalism rules and socialism is for fools! Just kidding, but can we please let the phrase "free market" die?
I think punishing interest rates are better than an equity stake. As Intel's rally shows, having the government as your equity holder is actually amazing for investors.
> On the other hand, I wish it were a more formalized process
It must at least involve Congress!
What's happening here is crazy: It's the same as if Congress authorized $X for a city bridge and Trump comes in and holds up the funds demanding a cut/kickback of the tolls.
The Constitution does not give the Executive the power to arbitrarily modify what Congress has authorized, converting between grants versus loans versus stock-purchases versus plain extortion.
I thought this too, but after reading some of the other comments here I read some of the text of the chips act and the 2021 NDAA (mostly section 9902) and AFAICT Congress appropriated a bunch of money for financial assistance for semiconductor companies and gave the Dept of Commerce the authority to determine the funding type.
That they were grants instead of any other instrument appears to be a Biden Commerce decision, not a congressional one.
I’m no lawyer and could certainly be missing something i the law that says it has to be grants but from what I see it looks like figuring out what to do the the money was pretty much delegated to dept of commerce with limited direction about eligibility and review criteria.
On a related story. Tesla was saved by a $500 million bailout loan from the DEO loan office. Part of the agreement was that the US government would take a stake in Tesla UNLESS they pay back the loan ahead of schedule. That's why Tesla paid it back ahead of schedule, Elon didn't want the government to take a stake. But he spun it as a victory for the US tax payer.
EDIT: Before downvoting, tell me where I'm wrong.
You're wrong because it wasn't some bailout it was a normal government loan available to to a wide range of companies. I'm not Tesla stan but it's massively misrepresenting the loan to call it a bailout. It's the kind of market investing the government should be doing, underwriting somewhat riskier loans to push the envelope on technology.
https://www.energy.gov/lpo/advanced-technology-vehicles-manu...
I agree. In fact, I think the government should own all utilities like they do in more socialist countries. It gets rid of price gouging, and the stabilizes the market in things that are necessary for human life.
The natural resources of the country should belong to all of us. Not just a select few.
Utilities are already strictly regulated by cities including prices. There is no price gouging when it comes to utilities.
Fossil fuels come to mind.
They ARE bailing Intel out. The company is in a terrible state and obviously incompetitive.
That makes sense. I think the thing that would make capitalism better is if the government did more to own the means of production.
Genuine question-
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?
There is only 1 winner and 1 loser: Intel.
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.
> It's the only chip manufacturer "left" in the US
Global Foundries, Micron, and Texas Instruments all come to mind
GF hasn't gone past the 12nm node. TI is at 45nm. Micron is on relatively recent processes, but they make RAM, not logic (which are totally different processes). Intel is the only chip manufacturer left that is working in logic at anything like the leading edge.
GF is a few nodes behind. Micron doesn't make semiconductors, they mostly make flash and whatnot. TI doesn't have the capacity or knowledge to expand to Intel's size/capacity
> doesn't make semiconductors, they mostly make flash and whatnot
Um.
All that stuff is still semiconductors, just with different patterns printed on them.
You're right but also wrong. Flash is just semiconductors etched in a different pattern than logic, but you don't print on semiconductors. Semiconductors are 'printed' on wafers via photolithography.
Intel's wafers are made of silicon, which is a semiconductor. Silicon on sapphire hasn't been widely used for a long time, if that's what you're thinking of. Photolithography prints resists on semiconductor wafers which are then used to pattern the next process step, such as wet etching, plasma etching, oxide growth, epitaxial polysilicon growth, ion implantation, etc. These mostly remove semiconductor from the wafer or alter its properties.
Interesting, I hadn't known that silicon is itself a semiconductor before all the circuits are added. Am I correct in saying that the etching process transforms a single semiconductor into billions?
No, silicon is still just one semiconductor, just like water is just one liquid. The substrate is still just one piece of silicon, despite having many silicon semiconductor devices fabricated in it. Polysilicon layers may or may not be additional pieces of silicon.
The linked ppt here has a lot of details: https://fabweb.ece.illinois.edu/
> TI doesn't have the capacity or knowledge to expand to Intel's size/capacity
I mean, they might if Intel were allowed to fail.
Much more likely that SMIC would, because TI isn't just 15 years behind; it also has the disadvantage of being in the US. See https://en.wikipedia.org/wiki/Semiconductor_industry_in_Chin... for a look at what it looks like where conditions are more favorable.
Yeah terrible position to be when your own government is investing in your competitors' company using your own tax dollars.
As a software engineer, this isn't an entirely new concept.
I think all three of those other companies are also getting CHIPS-act subsidies?
I suppose it could be worse. Still, now the US has a vested interest in seeing Intel crush AMD and others.
They just need to bribe POTUS, and everything will be fine.
AMD is not a chip manufacturer and what “others”?
Right, AMD sold off their foundry business as GlobalFoundries in 02009 to the Mubadala sovereign wealth fund of the UAE: https://en.wikipedia.org/wiki/GlobalFoundries
The others would probably be GlobalFoundries, Micron, Microchip, and TI.
"Real men have fabs" (no more, no more).
GF is a zombie company. Micron and TI are both far far away from leading edge. There is only one American company which is both developing and manufacturing leading edge nodes.
re: Micron - Memory is very different from logic chips. You vast number of repeating cells in memory. If any of them are bad you can just turn them off and bin them as lower capacity. You can do that to some extend with logic chips but not nearly as much as memory.
> the US expects China to invade Taiwan and this will kill TSMC in the process.
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.
I believe the most modern TSMC fabs outside of Taiwan are in Arizona. They are just moving to 4nm which is nearly 5 years old and just a revision of 5nm which is getting close to 7 years old.
TSMC aims to have N3 in Arizona by 2028 at the earliest which is 6 years after it first released. By that time, TSMC will have released N3X, N2, N2P, N2X, A16, and A14.
TSMC is heavily sponsored by the Taiwanese government and was created with the express purpose of making Taiwan so valuable that the West would be forced to defend them against China. Moving newer processes out of the country is against their national interests and they've made it clear that there's no plan to do that.
The Arizona fab has been mostly a letdown so far and it's not even doing e2e manufacturing - all parts get shipped back to Taiwan for final assembly.
GF is like a decade behind in research. Without years to ramp up and update their fabs they're not relevant.
Probably closer to two decades behind at this point.
Global Foundries is on 12nm. TSMC is at 3.
TSMC gets their machines from ASML who licenses their technology from the Department of Energy. The US will be OK.
If (or when) China invades Taiwan we will be better off than Taiwan but I wouldn't call us "OK" at that point. That will be a major disruption.
It will take decades for the US to get where Taiwan is now in semiconductor manufacturing, if ever. It's not just about building the most advanced chip factory. It's about re-aligning the entire nation's value system and culture to allow such development to happen in the first place.
We complain about the money we spend already. And now we're supposed to subsidize an entire industry to the point where we can build the most complex machines known to civilization at scale in a time-frame that matters to a global conflict that's potentially approaching soon? I don't see it.
> It's about re-aligning the entire nation's value system and culture to allow such development to happen in the first place.
It's taken about 8 years to realign the US from a democracy to a fascist regime, something that was nearly unthinkable. This isn't a hard problem with the right propaganda and manipulation.
Yes but it's easy to go from democracy to fascism. It's harder going the other way. It's like going from a clean house to a messy house is much easier than going from a filthy house to a tidy house.
If it was that simple, Intel, Samsung, etc. wouldn't be behind TSMC. There's a lot more to it than just buying an ASML machine.
This shows me you are not aware of just how much work goes into EUV and beyond besides simply buying the machine.
Outside of Taiwan TSMC foundries are just pumping out already developed non leading edge fab processes. Everyone who matters to TSMC tech development is in Taiwan.
The vast majority of TSMC production is in taiwan. If china invades the fabs will be destroyed. They pretty much would be forced to just stop operating, yes.
I see it different. The loser is the taxpayers. The loser is the market, which is less and less free. When there’s no incentive to run your company correctly… we get another company not run correctly.
How to run a company correctly?
Exactly. Expect to see some kind of additional intervention such as forcing a certain number of chips that currently go to TSMC to go to Intel.
This is my thought on it too. I don't think this is meant to be a political win so much as US intelligence views chip manufacturing extremely strategically. I also don't know about what will happen to TSMC. But the US has been pushing for US made GPUs as well. This goes back to Biden's admin as well.
https://www.tomshardware.com/tech-industry/us-govt-pushes-nv...
And the current administration is unlikely to help Taiwan in the event of said invasion.
Quite the opposite. Part of the reason Trump wanted to end the Russia-Ukraine war so bad was because they wanted to gear up for the "big fight". Ukraine simply wasn't a big strategic priority which is why they wanted to either end the war (best case), or shift responsibility over to Europe if that failed.
Lookup Elbridge Colby - served in first Trump admin and now Undersecretary of Defense. Along with Hegseth and JD Vance, they are all that same line of thought
Elaborate a bit more on the last para, please? I know Rubio is a hawk and bannon (who Trump still talks to) wants war
And now China knows the US expects this and it also knows the US does not expect to stop China, so China knows that it can expect the US to do very little. It's game theory turtles all the way down...
Edit: I think it's a misconception that China cares much about fabs in Taiwan. It wants unification.
It also means that China can expect the destruction of Taiwan's fabs to hurt the US less than China.
Combine that with the US's ability to unilaterally destroy Taiwan's fabs, and it sways the calculation a bit
Texas Instruments and Microchip: Am I a joke to you?
As far as I know none of them manufacture anything resembling a replacement for a Xeon, which is relevant to national security because those are uses in military applications.
I'm surprised to see on https://en.wikipedia.org/wiki/Microchip_Technology that Microchip does in fact have fabs. I thought it was fabless! Its fabs are in the US, but the assembly and test facilities are all across the Pacific.
Neither of them make high performance CPUs or GPUs
Yes
If the argument was for protecting Intel, then the US government should be placing huge orders with Intel for solutions that will fund R&D and allow the company to regain its position as a foundry. They should be tapping into the defense budget. DARPA should be involved. This was an opportunity for petty extortion and a step towards socialism.
A large bulk of CPU orders comes from Google, Amazon, and Microsoft. Want to say 50% of all AMD revenue is datacenters, and the Hyperscalers represent the largest chunk of that.
Huge order for... what? DoD's needs for chips are quite modest in quantity. Truth is that the US Gov doesn't need the volume which requires Intel to keep afloat.
Government involvement is the fastest way to corrupt the purpose of an organization, hollow out its soul and quickly get rid of all the competant people. There's a reason that the DOGE findings made a laughing stock of government employees.
> There's a reason that the DOGE findings made a laughing stock of government employees
Can you point out which specific findings? Ideally ones that are substantiated and not just one off tweets.
Depends on the implementation.
Switzerland owns its energy companies and its public transport company. Hugely successful.
It is not socialism. Socialism is when the workers control the means of production. Not a fat windbag mobster president and his thugs.
so.. shouldn't US take stake in TSMC instead?
What good would that do if China invades Taiwan?
The only charitable answer I could give is national security reasons for having domestic chip production, and even that could be accomplished in ways that don’t require the federal government having an ownership stake in Intel. For example, I don’t think the federal government has ownership stakes in Lockheed Martin and Northrop Grumman, despite those companies’ dependence on the military.
There’s a legal precedent that’s no doubt being abused. The Lima tank factory and Watervliet arsenal, for example are owned by the US government.
You are asking why save Intel of all chip manufacturers, and the answer is because there aren't any other major chip manufacturers in the US.
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.
> TSMC does now have fabs Arizona, though I'm not sure what their capacity is.
180,000 wafers a year. Globally they do 17 million. They announced first profit yesterday.
In the event that Taiwan is invaded, the EVERYONE would suddenly have a huge problem getting access to any kind of high end chips, be they CPUs or GPUs.
China would not takeover TSMC intact. Even if they did, they would not be able to operate it for quite some time (years), if ever.
US wants to maintain chip manufacturing presence and expertise within the borders, so saving everyone would achieve the goal but at a higher cost, so they're just focusing on the US ones in trouble.
I don't expect a good reason given the history of this Administration, but a reason in my mind to save Intel is there's only 3 license holders for x86 CPUs. Intel, AMD (American), and VIA (Taiwanese). A dead Intel leaves a single American company that is able to make x86 processors, and a monopoly for actually good x86 CPUs. But somehow I suspect there's no logical reason for this besides lining the pockets of those in the Administration.
What is missing is that Intel has US based foundries and US based talent.
I hope this is not the reason. I think x86 is a deadend technology. ARM's energy superiority makes it a better choice. x86 only still being used due to legacy/backwards compatibility but thats changing. Apple moved completely away from x86. Theres more and more ARM based windows computers being sold. Theres no x86 chips in phones.
Why would the ISA matter to the government? I could see this being about Intel's physical manufacturing capabilities, but the ISA should be pretty irrelevant. Recompile what code you can, run the rest via qemu-user-static.
While there are other good reasons to save Intel, if it went under, someone could still buy the license. I can’t imagine why anyone would want a license to x86 in 2025. It’s not like all of the companies designing custom chips are going to be falling over themselves to design use the x86 ISA.
A dead Intel could open the door to have more then three license holders. Isn't Intel the reason there are only three license holders?
The major patents on all the most important parts of x86 expired years ago now. Nobody wants to take on a legacy ISA with tons of footguns everywhere when newer ISAs have learned a lot of lessons from x86 about how to do things better.
What about Hygon?
I haven't heard of them until this comment, but reading through Wikipedia, and a techpowerup article, I'm not seeing that they actually own a license to manufacture x86 cpus freely. It seems like they were able to due to it being a partnership with AMD. I could easily be wrong though.
From my vague understanding I thought that Hygon is able to build atop Zen 1 IP that AMD gave Hygon, although they can't get anything newer because of restrictions on doing business with China.
Hygon still seems to be making x86 CPUs: https://www.techpowerup.com/336529/hygon-prepares-128-core-5....
They are the only US company that can produce cutting edge chips now and realistically within the next 15+ years. It doesn’t matter that TSMC produces chips in the US. That is nice for the short term but doesn’t do much for the US in the long term if TSMC falls under China’s influence.
Intel is in the midst of a dramatic turnaround and huge shift in strategy. It might fail. But if they succeed it puts Intel and the US in a much stronger position in terms of technology and military leadership.
It mattered for China to have Apple/Foxconn/etc assemble phones in China. By this same logic, won’t TSMC have more tacit knowledge to offer America than Intel, even if their independence is short-lived?
Why would TSMC or Taiwan want to give that information to the United States? There is a strategic reason why TSMC does not build their latest nodes and processes in the United States and why their R&D happens in Taiwan. They want / need The United States to protect Taiwan and their interests. It opens up strategic options for the United States if Intel or another US based company can produce cutting edge chips in the ballpark of TSMC.
This is a sure giveaway that the US military depends on Intel. It is the only major chip producer that has fabs in the US, and it is also the creator of the x86 architecture. That would mean that without Intel the military would become dependent on chips from Chinese Taiwan.
Not just the military, but the majority of consumer devices as well.
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.
>This is a sure giveaway that the US military depends on Intel.
"Giveaway?" This isn't some secret, everyone knows the military depends on x86 processors, and having a company that can produce them domestically is a national security concern.
This isn't a generalizable problem. There just aren't many companies that would be in a comparable situation to Intel.
Intel is:
* Critical to national security
* An advanced, industry that's extremely hard to spin up
* Essentially, one of two companies in it's industry.
Very few other companies meet all of those criteria.
What beats Boeing or Apple then so as to put Intel over the top of these guys?
Intel wanted the 9 billion in CHIP Act money that was being withheld and was willing to make a deal for 10% equity in order to get it.
All I can think here is the government forcing back doors
(like the failed Clipper chip) https://en.m.wikipedia.org/wiki/Clipper_chip
The thinking might be the government needs a local industry for security. Think submarine manufacturing. Not a huge private market for that, but best to keep local so the supply can’t be cut off.
Though usually the government isn’t the best stewards of companies. When I worked for a large government contractor someone joked “yesterday’s technology tomorrow”. Some of that is for reliability, but it wasn’t cutting edge in a lot of ways.
They supply components for the defense industry, where foreign production isn't a viable option. No one bank is more important than that. This is also why Micron is getting a free fab for strategic redundancy despite no clear reason why they would need 2x capacity after onshoring back to Boise.
This government? Bribe them on the side.
I take that back. It's the old one you bribe on the side, this one you can bribe in the open.
> How does Govt picking winners and losers going to help?
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.
Achieving that doesn't need to take the form of a 10% stake in a flailing company.
The US can't employ poverty-tier labor to enable competitive margins, though. American businesses and global trade partners already largely reject Intel's foundry services.
Labor is not the key factor driving chip prices or performance. Fabs are highly automated and filled with extremely precise machinery. The maintenance and upkeep of machinery, the yield per wafer, and consumer demand drive the prices. Labor is basically a rounding error.
Doesn't matter. All of the US's advanced weaponry systems now use "state of the art" electronic systems, which in the context of defense only means "not decades out of date." Two or three generations old is perfectly fine. The military does not need the latest and greatest CPUs and GPUs going into the iPhone 17 or whatever, but it does need the equivalent of the chip in the iPhone 12 or iPhone 8 or whatever for integration into next generation weapons systems.
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 or drones use chips from TSMC, and TSMC is in occupied territory or a war zone... the US can't make more missiles or drones. 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.
The China narrative is pure nonsense. You always have guys like Gordon Chang pushing alternating stories about the coming collapse of China, followed by a scary hegemonic whatever.
Regardless of whether you believe the China narrative is true or not (that is to say, whether China will actually do this or not), it is driving US policy.
Well, these guys have literally been saying the same crap for 30 years, so it’s a good bet they are full of it.
You’re reading a lot into the US right now. US policy in 2025 is more about which member of the whack pack is the alpha gorilla than anything else.
In the executive branch. Congress has more say in setting defense acquisition policy.
I mostly agree with this but have a hard time digesting the fact that someone would invest going to war with inferior looking strategy and technology.
Future wars are likely going to be GPU driven, ML heavy entities where efficiency matters a lot more than brute force, blunt grenade throwing wars of the past.
A super power like US would likely want to be in the forefront of this if they happen to be in a tussle with a worthy adversary.
Bleeding edge efficiency doesn't matter as much as you think in those applications. A 20% or 50% energy efficiency matters a lot for datacenters or mobile phones. It matters less in a smart bomb, missile, or tank.
The upcoming generation of weapons is going to use realtime sensor fusion done by AI. Cutting edge chips will matter for those weapons.
The existing systems do this. Look up the F-35. It's what I was referencing. Bleeding edge state of the art chips aren't required though, or even practical -- these systems need a lot of validation before use, and that makes them always a few process generation behind.
I'm not talking about the plane. I'm talking about the weapon itself.
Imagine a next-generation fire-and-forget weapons with radar and broad-spectrum camera arrays and an AI trained on a fused version of all this data. Typical defenses like chaff or flares would be rendered almost entirely useless.
This kind of visual approach also renders modern stealth almost completely useless. When an unexpected plane is found on L-band (or some other low-frequency radar), the AD would simply fire a couple of missiles into the area with instructions to visually identify the large objects moving at fast speeds using the fusion of these different sensors (and ground+air-based radars) while in flight.
We are getting pretty close to being able to do this in realtime with cellphone-level chips.
Yeah, this kind of whole-battlefield sensor integration is part of the F-35 program. It's not specific to the plane. You don't need the absolute latest gen hardware to do this.
Haven’t you read Curtis Yarvin’s vision for America? Our leaders, VCs, and owners have
I don't care how nihilist or kafkaesque you want to take the conversation - the math won't check out. You can't sustain a third-sector economy on second-sector jobs while importing first-sector goods. The entire financial system in America won't survive that sort of transition, it would be the Great Leap Forward of the 21st century.
One of the things about the Great Leap Forward is that it happened. Just because a path of action will obviously lead to mass death and suffering while accomplishing nothing doesn't mean it won't be taken.
This point of view seems to bear repeating these days as the US leadership seems to be re-purposing Lysenkoism and its methods for the pro carbon burn movement and the anti-biological research movement.
Most of the answers are going to be national security. That is the reason used by third world countries to nationalise companies.
Free market capitalism is great until you’re about to be the big Loser. And then the big dog steps in and yells for time out.
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?
What other US based chip manufacturers are there?
>Wouldnt it be like 25 years too late, with Intel and its heydays !?
wtf? what do you mean, they're like less than 1 year behind TSMC when it comes to leading node
(disclosure Intel Shareholder) I don't think they are one year behind. I think it is more than one year and for a long time they have not been closing in.
If they actually release Panther Lake on 18A this year, so one year to fix yield should be reasonable assumption, right?
x86
Because Dump personally pictures being able to instruct all personal computers to "dont do woke"
The end result is more like all the rich people take their cash and jump off the top of the pyramid as it crumbles
Yeah why not fund a new foundry startup?
It would take a decade and hundreds of billions of dollars with no guarantee it would work.
It's a terrible idea
That's extremely risky, like 100 to 1.
Sure tough business but, risky compared to what? Intel?
Yeah. Risky compared to Intel. Intel manufactures chips _right now_. They have lost their process edge, but if I have to put chips into a drone tomorrow, I'm betting on Intel rather than any bag of scrappy kids. The risk that they _can't_ produce chips is the same risk as that of Hillsboro Oregon getting carpet bombed -- which is of course not 0%.
Note that there are several drone microcontroller manufacturers based in the U.S. right now - ModalAI, ARK Electronics, Rotor Riot, etc.
The thing about drones is that they actually don't require much computational power compared to modern consumer computing. It's just math - control systems, calculus, trig, waypoints, etc. All of these were solved problems in the days of the Apollo Guidance computer, and will run comfortably on chips from 2 decades ago. The STM32F722 microcontroller that is one of the most common hobbyist drone chips is built on the 90nm process node, runs at 216MHz, has 512K of SRAM, and costs about $5/chip. FWIW, it's made in France and Italy rather than China, and STMicroelectronics owns its own fabs rather than outsourcing to TSMC or Chinese companies.
If you want to do things like computer vision on the drone, the computational requirements are quite a bit higher, but you can still run something like YOLO at orders of magnitude less computational power than what you've got in a Pixel 9 or iPhone 16.
...which makes me wonder if a better strategy for the military would be to fund a wide variety of domestic chip manufacturers operating at decades-old process nodes (eg. the 65nm process node from 2005 seems to be at about the sweet spot), rather than try to prop up the one American company that can compete on cutting edge 7nm process nodes. Particularly since the experience of WW2 was that simple, robust designs that could be easily licensed to other suppliers and mass produced (eg. the Hawker Hurricane, Grumman F6F Hellcat, Grumman/GM TBF Avenger, Liberty ship, escort carrier) were much more effective at turning the tide of battle than designs that were on the cutting edge of technology (eg. the Vought F4U Corsair, Gloster Meteor, Japanese Shinano aircraft carrier). The latter were often better in absolute performance, but arrived late, in small numbers, and with teething troubles that made the former carry the bulk of the battle. The Liberty Ship, for example, used reciprocating steam engines that were 50-year-old technology in WW2, but they were "good enough" and dead simple to make.
You make an excellent point. My uC experience is limited to ESP32 chips (made in china) but that's another example of how much 'old' tech can do when it's cheap, easily available, easy to integrate, and not running bloatware.
If you think getting a couple million dollars of funding and expecting to show profitability in a few years is hard, just wait till you try it with billions and 5+ years.
This feels like another signal that the U.S. as an economic superpower is transitioning into something else.
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?
hopefully it's only for 3 more years. One aspect of fascism is government politicians taking over businesses for their own power and monetary enrichment. I'm not sure how this makes Trump richer, but I'm sure there is some angle to it, there always is.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> 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.
Because this clears the way to sell Intel Foundry and separate the chip design from the chip-manufacturing businesses completely.
The CHiPs act money had claw-backs such that if Intel sold the Foundry off they had to pay the government all the money back. This new deal waives all the clawbacks and says instead the Government gets warrants, good for five years, for 5% of the company at $20/share, good once they control less than 51% of the Foundry.
Ergo, the reason for the deal is that the board wants to sell off the Foundry, and didn't want to pay back the CHiPS act money.
Good context, thanks. If it’s likely that the Foundry will be sold off, do you view the extra 5% as a short-term profit and not really a geopolitical/strategic protection?
Seems the Foundry is the bit that USG really is trying to backstop.
Just another Trump shakedown. Nothing to see here.
It's extremely good business for the US. Trump doesn't get to take this with him.
North Korea in the streets, Venezuela in the sheets... :)
I have a feeling I'll be waiting a long time for the old "Tea Party" to rise up again and start protesting this.
The only way you're going to get people to notice anything at all is if you shut down the internet.
Working on it.
Shakedown list: Nvidia 15% of revenue AMD 15% of revenue Intel 10% of capital
Who else is next?
Just to add:
what about the part where a single person is dictating taxes on American companies? That does not seem to phase that many people in the tech space...
And what leverage did the administration illegally (without Congressional authorization) apply to get this deal?
At least when the Bush admin did the first part of the financial bailout in 2008, they had Congressional authorization (a bill was passed).
A deal for 15 percent of revenues of specific AMD and NVidia part sales in China != 15 percent of all their revenues, not even close.
Demanding 15% of H20, causing China to retaliate and ban it, causing Nvidia to halt production.
In terms of net effect, it’s atrocious regardless.
Rare earth miner MP Materials back on July 10. Next feels like TikTok or Fox News.
With time military companies need to pay their allegiance money so that they can break sanctions and oh national security. Some will approve because of the same reasons as Nvidia deal, who leaves that money on the table?
I'm not mad about a corporate tax on semiconductors sold to an adversary and agree that a tax is better than a ban on those sales.
Intel press release:
https://newsroom.intel.com/corporate/intel-and-trump-adminis...
So no shareholder vote required?
It is equivalent to a 10% dilution (shares issued for no extra cash).
No, the shares already existed, they were just held by Intel. According to their most recent 10-K, 10 billion shares of common stock are authorized, but only 4.33 billion were issued and outstanding.
How can this be any good for Intel? Why is the stock value bumping 6%?
The CHIPS grants had clawback provisions, which carry risk. This transaction removes that risk, so it's very good news for Intel.
> 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 those 2 billions compare with 10% of Intel?
Because the government having a financial interest in Intel’s success is expected by the market to result in the government acting in Intel’s interest, in order to profit.
You would think the US government would be interested in the US government's success, but the past eight months have proven starkly otherwise. What makes one think they will be looking out for Intel's interests any better?
How can you say they don't care about success? When they got bad numbers they immediately fired the person responsible.
Just in case you aren't joking, they did not fire the person responsible for the bad numbers. They fired the person responsible for observing and reporting them.
I was joking, although it was a gesture at a real thing. I don't know how much they don't care about success, versus caring but being deeply confused about how to reach it, versus in some sense "caring" but prioritizing other things. But regardless, retaliation against bearers of bad news is a great way to horrifically mismanage an organization, and we seem to be seeing it repeatedly from this administration, and it is alarming.
They also have a national security interest as well.
Government now has a vested interest in seeing Intel succeed. And as much as RW debate in bad faith about cutting public funding being good and private entities should pick up the slack etc. there is no bigger catalyst than government policy. Intel can now get preferential policies like bigger tax breaks/holidays, preferential treatment in government contracts, cheaper access to Federal land etc.
In the long term though, at least in hands of the government like the current admin, they will ensure Intel slows down innovation. They will push for every company in US to use Intel chips in one way or the other - national security and what not. Without competition companies often get complacent - not many can match the might of a government and US govt at that. So, yay for national security and nay for Intel becoming innovation powerhouse.
It means Intel is far worse off than publicly acknowledged, and without this it might be worthless.
It doesn't mean that.
Sometimes, there are returns on investments beyond what an accountant would calculate, but the investment only costs the same. Making stock priced only for normal returns a buy for beneficiaries of said additional returns.
In this case, reducing the risk associated with the imported chip supply.
lol, buy buy buy buy BOOYAH JIM
Intel is now a meme stock. The gamestop crew is getting in
Everyone is talking about "bailouts" and "owning a company that the government funds."
This isn't about that at all. This is about the breakdown of the rule of law, a unitary executive bypassing all other branches of government and demanding a private enterprise give itself over to the government.
If you don't think there was an "or else" as part of this deal, you're largely mistaken. If you don't think that there will be other questionalbe demands placed on Intel in the future from this government, you are largely mistaken.
But y'all go ahead and can keep arguing over whether we should "get something back" from this deal. Because that's really going to maker ameraica graet agian.
“National security” is often used by third world countries to nationalise companies and industries. Often with a bad outcome.
Once the money is in, government becomes invested in the success of the company. This leads to preferential policies and government demands for the invested company. I think it is safe to say that US is going full on third world strong man government at this point.
Unfortunately, this ship sailed quite some time ago. For example, after the 2008 financial crisis, the Senate rejected a proposed bailout of GM. But Bush approved it anyway: https://en.wikipedia.org/wiki/Effects_of_the_2008%E2%80%9320...
> However, it had been argued that the Treasury lacked the statutory authority to direct TARP funds to the automakers, since TARP is limited to "financial institutions" under Section 102 of the TARP. It was also argued that providing TARP funds to automaker's financing operations, such as GMAC, runs counter to the intent of Congress for limiting TARP funds to true "financial institutions".[79] On December 19, 2008, President Bush used his executive authority to declare that TARP funds may be spent on any program he personally deems necessary to avert the financial crisis, and declared Section 102 to be nonbinding.
Also, “unitary executive” doesn’t mean overriding other branches. It just means that whatever powers the executive branch does or does not have are exercised by the President, just like the 535 members of Congress exercise all the powers of Congress, and the 9 Justices exercise all of the powers of the Supreme Court. It means that executive branch employees don’t have independent powers, just as House staffers and Supreme Court law clerks don’t have independent powers.
See: https://en.wikipedia.org/wiki/Federalist_No._70 (“Federalist No. 70 emphasizes the unitary structure of the executive. The strong executive must be unitary, Hamilton says, because ‘unity is conducive to energy...[d]ecision, activity, secrecy, and dispatch will generally characterize the proceedings of one man in a much more eminent degree than the proceedings of any greater number.’”).
> Also, “unitary executive” doesn’t mean overriding other branches. It just means that whatever powers the executive branch does or does not have are exercised by the President,
And then you find the executive is what chooses to enforce rulings against the executive. They were not trying to set up something like the UN security council with a defacto veto on all passed law.
> And then you find the executive is what chooses to enforce rulings against the executive
Correct. But this is true in almost any conceivable system. The entity charged with enforcing the law will be charged with enforcing the law against itself. “Who watches the watchers?” The founders thought of that and their solution to that was elections and a relatively short 4-year term.
Conceiving of the executive as having subparts independent of the elected executive actually breaks the system. Because now, whatever subpart you assign the law enforcement function is unelected and insulated from political accountability. Now, nobody can watch the watchers!
It turns out the founders were smarter than the current facility of Harvard Law School.
>Also, “unitary executive” doesn’t mean overriding other branches
I feel we're headed for a No True Scotsman fallacy. The Trump Regime and Roberts court endorse the unitary executive theory, and they are happily overriding Article 1 powers and violating laws like the Administrative Procedures Act based on this theory's farcical and ahistorical logic.
If the theory wasn't giving him more power (like firing non-political appointees without cause or withholding funds appropriated by Congress) he wouldn't be using it.
The "unitary executive theory" is just a pejorative label for Article II, Section 1, Clause 1: "The executive Power shall be vested in a President of the United States of America." Alexander Hamilton talks about it in Federalist 70: "I rarely met with an intelligent man from any of the States, who did not admit, as the result of experience, that the UNITY of the executive of this State was one of the best of the distinguishing features of our constitution." (https://avalon.law.yale.edu/18th_century/fed70.asp).
Nobody called it a "theory" until FDR appointees ginned up a fourth branch of government in the 20th century. Then, they needed a label for what actually existed in the constitution to distinguish it from the shit they just made up. But most of the people who use the phrase "unitary executive theory" also think "emanations from penumbras" is constitutional law...
Also, the APA doesn't apply to the President, and it wouldn't be constitutional for it to do so.
What Trump is doing is pure extortion. Intel gives up equity, and in exchange, Trump maybe doesn't use the massive power of the state to claw back billions of dollars that were legally awarded to Intel, and Trump stops pressuring Intel to fire their CEO (note how he now calls the CEO "highly respected").
The comparison to the GM bailout makes no sense. GM got something that it needed from the bailout. Here, all Intel is getting is the withdrawal of threats that Trump himself made. It's mob boss style government, and it's happening to many institutions in this country (law firms, universities, corporations, etc). Why you would want to try to normalize it is utterly beyond me. Maybe you just like being the "well actually" guy because you think it makes you sound smarter than everyone else.
I’m not a “well actually” guy, I’m a constitutional fundamentalist. It’s definitionally not extortion to threaten to do something you have a legal right to do. The CHIPs Act gave the executive a bunch of money for making discretionary grants. And that means the President has a bunch of money to make discretionary grants.
Also, why should we give companies money without getting equity?
>Maybe you just like being the "well actually" guy because you think it makes you sound smarter than everyone else.
He's a lawyer at the Federal bar, so on the subject under discussion he is more knowledgeable than most of us.
Knowledge doesn’t override partisanship. Rayiner used to be a thoughtful voice here but, like many other Republicans, in the age of Trump personal fealty outranks knowledge or past principles.
I've believed the administrative state is unconstitutional since I took admin law in law school (when I was a Democrat).
> unitary executive bypassing all other branches of government
Is there even a pretence of a law being cited by the White House?
...thats how the US Constitution works. Congress passes laws (CHIPS Act) and the executive branch is empowered to carry them out - in this case the Secretary of Commerce and Commerce Dept. One can argue whether it stretches the intent of the law, nothing wrong with debate. But as of now, I don't think any judge or court has contested in the interpretation of the language.
Which part of the CHIPS act says companies receiving funds have to give the government 10% of the company to continue receiving funds?
Section 9902 of the act authorizes the Secretary of Commerce to provide financial assistance to "covered entities"
One can argue how to interpret "financial assistance" broadly, which is exactly what the administration has done.
> One can argue how to interpret "financial assistance" broadly
The money was already granted. Trump threatened the CEO personally and then they came to this agreement ex post facto.
> One can argue how to interpret "financial assistance" broadly, which is exactly what the administration has done
You can? So some years later they can change it again? Where's the trust?
The takeaway is the next Democrat president should just declare a public transit emergency and start building while the courts squabble. Same for housing reform. Same for climate change and shutting down coal power plants—once you shut it down and take out the turbines, it doesn’t matter what the courts say.
Yes, they should.
However in case of democrats president Supreme Court will be surprisingly fast on issuing emergency decisions and stopping executive actions…
They should then just ignore the courts decisions they don’t like like the current administration does.
> as of now, I don't think any judge or court has contested in the interpretation of the language
Who has standing to sue here? The best I could see is a shareholder lawsuit, but that will take years. Meanwhile, this administration is getting slapped down by courts across the country, including a SCOTUS willing to overturn precedent to curry his favour.
Congress, if they cared.
The "or else' isn't the problem. The problem is the government trying to get involved in the first place. Intel was not forced to give away 10% of their company for 10 billion dollars, they simply wanted the 10 billion dollars. It's the fault of our government for propping up failing companies. Intel should be dying instead.
Intel may well have wanted to donate some ownership more than it wanted 10 billion dollars. They are now in a position to argue forever that what's good for Intel is good for the federal government.
> They are now in a position to argue forever that what's good for Intel is good for the federal government
What does that even give you? They can argue all they want. Doesn't mean the government will listen.
It's a fairly routine practice for business owners to let local politicians invest in their business.
Why do you think that is?
> fairly routine practice for business owners to let local politicians invest in their business
Let? Like this 1? Where if you don't we threaten to fire the CEO and take over the company otherwise?
Are you sure it is let?
> local politicians
Is 1 or more individuals. In this instance it is "the government" as an entity. Not the same?
First think about why it happens, and then decide whether you think this is the same.
So if I decide so it’s true? I don’t get where you’re going with your comments?
Whatever you decide is, by definition, what you believe is true. You don't seem to be particularly skilled at accurately determining what's true, but there's not much I can do about that other than providing the advice I've already given you.
Trump was explicit about the "or else" part. He said publicly that Intel did it because "[the CEO] wanted to keep his job," a reference to Trump's earlier pressure for him to be fired due to his vulnerability to pressure from the CCP.
Why would the government need to "demand" to buy a piece of a publicly-traded company? Is 10% of Intel more than what is being traded in the public market?
As I understand it, the government didn't pay anything for these shares.
"purchasing 433.3 million shares at a price of $20.47 per share" in the article. That was the price a day or so ago
Why does this keep coming up?
They're paying the rest of the CHIPS Act money. Overall, they're putting in over $10B into Intel.
Where in the bill passed by Congress does it say taking funds entitles the government to 10% of the company 3 years after the fact?
> company 3 years after the fact?
Intel hasn't gotten most of the money they were awarded. Even the Biden administration were hesitant in doling it out, because of concerns that Intel could deliver. That's why out of frustration, the previous CEO became vocal in saying "We still haven't gotten any money yet!" and was openly frustrated about it.
Lip-Bu Tan, in the last quarterly earnings signaled a decent likelihood of not developing 14A (and thus halting much of the semiconductor infrastructure they implied they would need the CHIPS money for). So it's perfectly fair for the government to say "We're not giving you the rest of the money."
What this deal does is release the rest of the money, but with strings attached.
There were always strings attached - even with the prior administration. The strings have merely changed, and Intel benefits by actually getting the money now vs a long drawn out process.
> They're paying the rest of the CHIPS Act money. Overall, they're putting in over $10B into Intel.
So taking a scholarship means you're giving a % of yourself to the school?
Was this ever mentioned when Intel signed up? Did you know about it?
> So taking a scholarship means you're giving a % of yourself to the school?
> Was this ever mentioned when Intel signed up? Did you know about it?
See my other comment:
https://news.ycombinator.com/item?id=44993388
The main point is that even with the prior administration, it wasn't a given Intel would receive all the money. This way, they get the full amount, and fast.
> This way, they get the full amount, and fast.
Intel has >20B in the bank. If they really want to they can wait and sell shares for a better deal like with SoftBank.
i.e. not the main point.
They had that money in the bank (and much more) when they lobbied to get the CHIPS act passed. They want the money.
So yes, this is all about getting the rest of the money.
The administration is deciding they should not get it for free. Which totally makes sense given that Intel is openly signaling a willingness to halt semiconductor research.
This will scare off foreign investment. Especially pharma which can be considered national security. Why would I invest billions in the US to risk having my factories taken by the US government when the market in India or China is way bigger and the risk at this time seems a lot less.
> This is about the breakdown of the rule of law
Wherever Law ends, Tyranny begins.
Straight up blackmail. It was my immediate thought, and nothing I’ve since it was announced has changed my opinion.
> is about the breakdown of the rule of law, a unitary executive bypassing all other branches of government and demanding a private enterprise give itself over to the government.
What do you think about Senator Bernie Sanders backing Trump plan for government stake in Intel?
https://www.aljazeera.com/economy/2025/8/20/us-senator-berni...
It's odd seeing Republicans endorse state owned companies. Bernie has at least been consistent in his beliefs.
> It's odd seeing Republicans endorse state owned companies.
What’s even more confusing is that the Republicans voter will rationalize this!
> Bernie has at least been consistent in his beliefs.
So same outcome. The question is whether the two “sides” see their common point of view.
I think "fuck your whataboutism."
I'm glad Sanders never made it past senator. If only Trump never made it past casino owner.
A lot of people are commenting on this without reading the actual content of the deal, which is spelled out in Intel's press release: https://www.intc.com/news-events/press-releases/detail/1748/...
Here comes the nationalization phase of fascism. Well done, freedom lovers. You voted in exactly what you fear most.
They never feared it, they always wanted it, just with someone like Trump calling the shots. Every accusation is a confession, etc.
This is worse than I expected. They're apparently putting in no new money and retroactively demanding stock in exchange for grants that were already awarded. If Intel can't afford to build 14A and we're putting in no net new money... then Intel still can't afford 14A? Unless they were lying.
It's just cronyism and bribes. Nothing more to it. From "he must go" to "Intel is so great that we demand a 10% stake” in a week. Mussolini-style.
There werestrings attached to the CHIPs act money. Not saying this is some great deal. It isn't. It is a deal made from a place of necessity and weakness for Intel, but it gives them the cash infusion they need in the short term. Right now Intel's only goal is to have enough money to get 14a off the ground and attract at least one large external customer to prove their capabilities.
Maybe it’s more about affording 641A
... what would a chip version of 641A even look like?
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?
So the US is getting lower-case intel here, in addition to upper-case Intel.
Or they just devalued all of the current stock holders. Intel needed the capital, not Intel stock
If the US had bought 10% of TSMC, with no voting rights - just increased dependency - it would have sent a very strong signal.
Its an interesting idea, not a serious suggestion.
The US has been slowly but steadily sending the opposite signal over the past year: “just wait a little and you can have Taiwan”
If the US can replace the need for Taiwan... Yeah. They no longer matter to us if we can replace the manufacturing capacity.
That would have cost more than $100billion, not the $10billion for the same sized stake in intel.
Ironic, Western politicians thought opening up to trade with China would lead to it adopting a Western model of government. Instead it's lead to the USA adopting the Chinese one.
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Yeah, this so weird coming from the US. The US government has a history of writing no-strings-attached blank cheques to people/companies just so avoid the stigma of government control in public companies.
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?
Name one literal no-strings-attached blank cheque to a large company in the last 20 years
Perhaps not strictly “no-strings-attached” but many of the 2008 bailouts were functionally mechanisms to avoid nationalisation.
Lol the jail free bailouts of the banks in 2008? Goldman got billions from the bailout of AIG, management got millions and millions in bonuses....
Those bailouts were generally loans that were paid back. Pretty far from a "no strings attached blank cheque".
https://en.wikipedia.org/wiki/Solyndra
https://en.wikipedia.org/wiki/CHIPS_and_Science_Act
Any Federal corporate tax relief at all. They put the pedal down on accelerated depreciation after 2008, though it existed over 20 years ago.
Any swapping of Federal Reserve bonds for corporate bonds, say during the pandemic.
Any cost-plus defense or aerospace contract.
Kinda. But I think the current Chinese model is actually much closer to how the USA used to work when there was competition with the USSR. Closer than the US of today compared to the 70s and 80s.
The current Chinese model's basically you have fully publicly traded companies, companies who are either minority or majority owned by a certain provincial government and ones who are either minority or majority owned by the central government (although this is surprisingly rare outside of key areas like telco/banking)
Something like 60% of the top of 100 companies in China are entirely state-owned. Most of the rest are government stake
https://msadvisory.com/china-biggest-companies/
Look at this list - all the big ones here which are state owned are investment banks, petro companies and telcos.
Everyone else on the list (mainly internet companies, BYD, gaming, and B2C sales/distribution) is privately owned.
key industries are all controlled by the govn't
The US never owned a brewer, an airline, the major defense giants, etc.
"Air America was an American passenger and cargo airline established in 1946 and covertly owned and operated by the Central Intelligence Agency (CIA) from 1950 to 1976."
https://en.m.wikipedia.org/wiki/Air_America_(airline)
You need to study history. US government is no stranger in getting stakes in businesses. Did you already forget the Great Depression?
https://www.investopedia.com/articles/economics/08/governmen...
We aren't anywhere close to being in a depression though. What extraordinary situation requires the government to take a stake in a public company and under what conditions will this position be liquidated?
> We aren't anywhere close to being in a depression though.
This may be true in the economic sense. But “depression” is as much a political sensation as it is a technically defined economic term. We happen to live in an era where economics for the public is profoundly politicized.
We are very close to being in a depression. Most of our money has nothing to do with actually feeding or housing people. If the wrong thing shifts, we're toast.
The unemployment rate is still near historic lows and while new job numbers are getting worse they're still positive overall. We aren't anywhere close to being in a depression currently.
The unemployment rate does not count people who stopped trying. We are far closer than you think.
It somewhat makes sense in terms of industries which are deemed strategically important. Intel needs to start thinking long term instead of short term profits.
> Intel needs to start thinking long term instead of short term profits
Which is what the last CEO was in the middle of doing and he got fired just recently because they couldn't stomach it
The CHIPS act founded the National Semiconductor Technology Center for this purpose. As for Intel, they aren't even achieving short term profits…
OP didn’t make a value judgement about which model is better or makes more sense!
Intel has had a couple years of saying they were going into a more long term vision and failing, and it’s unclear how direct government ownership will make them get better at execution
if someone believes this, they should buy intel and just do it outright! But no one does because it's not as easy as "just think long term" - if it were, berkshire has the liquid money to buy intel several times over.
A large new powerful shareholder come in supporting long term thinking does make a difference.
Public shareholders are generally short term motivated.
One clear reason it doesn't make as much sense to Buffet is he wouldn't get the national security hedge that made the stock a buy for the government.
I wouldn't call those two years till the next elections long term.
That's very cute quip but I notice that it places the blame on 'trade with China' for an alarming problem that is in fact entirely the doing of US voters expressing their values (or the lack of them) in fair elections.
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.
We even have no assurance of keeping private property via civil asset forfeiture!
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.
Civil forfeiture existed since 1660s, and was used initially to confiscate smugglers' vessels. Then it was dug out during Prohibition, and turned toxic in 1980s when the agencies doing the forfeiture (e.g. police) were allowed to keep the confiscated property. Ideally it should be used for restitution (e.g. to victims of fraud), but...
I suspect you were growing up when this was in full swing already.
We also have criminal forfeiture, which was leveraged a lot more then. Civil forfeiture use expanded dramatically in recent decades due to profit sharing with DOJ alongside court challenges failing, suggesting the need for constitutional amendment if awareness of the practice improves.
Both should have more reforms.
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The Chinese have been surprisingly willing to let companies and sectors die even at the expense of growth (see real estate), I think it's honestly too charitable to compare the US to China, which has at least some degree of technocratic governance, the US went straight for something out of the Tropico franchise
post hoc ergo propter hoc fallacy
(Also, pet peeve: "it's lead" should be "it's led".)
We're living in the time of irony. Up is Down, Left is Right, Right is Left. Republicans have become Socialist. Free Speech absolutist now against Free Speech.
The promiscuous relation between government and tech is as old as Silicon Valley. I'm fact, it created Silicon Valley. It started when people in China were still building backyard furnaces.
Who ordered the Chinese people to build furnaces in their backyard?
Some guys who wanted to make China Great Again.
It’s not “adopting” the Chinese model yet, so much as incoherently copying bits and pieces. If you want to run effective industrial policy you need sufficient state capacity and an army of technocrats who are experts on industrial policy. Trump’s second term performance gives no hope on both fronts.
Western governments have taken a stake in, nationalised, or owned / operated corporations for a very long time!
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...
Most of these were done under duress or specifically for public goods (BBC, for example).
Taking an ownership stake in broad daylight for political favors is very much unprecedented in the modern economy.
> Most of these were done under duress
So the Intel case not done under duress?
> Taking an ownership stake in broad daylight for political favors
The article didn’t spell it out or maybe I missed it but what political favors?
It's not if you now live in a (if not soon) dictatorship.
Calling VOC an offshoot of a western government with any modern relevance is a HUMONGOUS stretch
No, I think you're missing the wag-the-dog portion of this event.
Ha! Too perfect
[Ex Post Facto Clause, US Constitution](https://www.congress.gov/crs-product/IF11293). Oops, I thought it was so obviously going to be done away with in the courts, but in 1912 the Supreme Court ruled that it applies only to criminal punishments.
They always getcha with the fine print.
The Supreme Court’s standing doctrine is also weird. If the board of directors approves it, then would the shareholders even be able to sue?
I wonder if this means the US is going to come for Global Foundaires, TI and Micron to extract an equity stake too. Interesting times.
TI and Micron probably. Not sure about GloFlo - UAE's Mubadala has a very strong controlling stake in it.
Forgive me...how is this different than taxes?
And wouldn't it be better to oh, I don't know, enforce the standard corporate tax rate?
Corruption is worse than taxes, because it's unfair. Now the government has an incentive to hurt AMD and free competition.
The distorts incentives and destroys the free market.
It's not like taxes because they are just making up the rules as they go along.
I look forward to the people who always claim “taxation is theft” to comment on a single man deciding to strong arm a company into giving 10% to the government.
This is a bailout; it's the opposite of taxes.
Isn't it the opposite of a bailout, given that the US gov't is seizing an ownership stake retroactively based on past grants/bailouts but giving no new money at this time?
The CHIPS Act was the bailout; this is just replacing the previous profit sharing with equity.
CHIPS act is a grant similar to a small business grant, not a bailout at all. It was intended to incentivize chip production in the United States and was available to any company manufacturing in the united states. It had no equity strings attached, as authorized by congress.
It was very messy bailout then
Most of the money has already been given:
> 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.
No No No.
Grant money is counted as income. It is thus taxed.
If this were really an investment it wouldn't have been taxed.
Forget the grant. The grant has nothing to do with what happened.
Intel's board of directors voted to give 1/10 of the company away and thus devalued your shares.
I’m reminded that Chrysler took a big loan from the US government in 1979, $1.5 billion which today is equivalent to about $5.9 billion USD according to the inflation calculator I found.
FIAT is somewhat state-owned anyway.
I finally grok the Republican party. It's only socialism if it helps the poor. Government handouts to corporations and trade protectionism? Mainly helps the rich, so it's not socialism. Tax money spent on a special interest program? Again, if it mainly helps the rich (or their party's base), no problemo. They're the Kleptocracy Party.
Klepo-pluto-kakisto-kratocracy with socialism for the rich.
> Intel said that the U.S. government won’t have a board seat or other governance rights.
What rights does this refer to? Normal shareholder voting rights or something else?
They will vote with the board
A lot of criticism of China is about how the government controls companies... isn't this literally it? I mean it was already the case before, but they tried to pretend it wasn't, now they literally own a stake in intel.
Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point.
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.
> Capitalism for profits, socialism for losses. I’m sick of seeing this sort of behavior pan out time and time again, though I’m hardly surprised by it at this point
I'm not sure how this applies.
The US government just gained a 10% stake for nothing (that wasn't already given). Effectively going from the scenario you are painting to now taking a part of the profit as well.
I guess you were surprised after all!
The whole point of equity is that it can go to zero. Profit sharing means that the government had an upside (if Intel became profitable) and no downside. Now, if Intel loses money or goes bankrupt, 10 % of those losses automatically get socialised.
Great explanation of the socialism for losses, which was already happening and is the normal bailout routine.
Now explain how "Capitalism for profits" applies.
This sounds bad. Can someone steelman this for me so I can understand the good?
If you’re going to give taxpayer money to a for-profit company, taxpayers should receive a share of the company in return. I generally don’t like 90% of the policies we’ve got going on right now, but I actually feel okay about this one.
> taxpayers should receive a share of the company in return
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.
Doesn't this create an incentive for the US Gov't to boost Intel and harm their competitors? That seems not great to me from a competition & healthy markets standpoint.
The problem is more severe. Previously the US government was passing laws (such as the CHIPS act) and then enforcing/executing them.
Now it is just doing whatever it wants.
This is only good for a very small sub-set of people, everyone else is worse off.
What competitors?
In the rare conditions where this has been necessary in the past, US companies have been given clear terms for regaining control of those shares. I'm not seeing any buyback provisions.
This is ignoring the original agreement of profit-sharing with the government as was in Biden’s original plan. Feeling “okay” or not “okay” is irrelevant until we know how well Intel does in the next decade and calculate the cost against the profit sharing agreement.
Yeah, I haven’t dug into the numbers to know. Which option makes more money for the government (and therefore the taxpayer, sort of) - a profit sharing agreement, or a share of the company (which, as with all publicly traded companies, is a profit sharing agreement that sometimes happens through dividends, and sometimes happens through stock sales).
Who cares about the money recovery, the actual concern is about getting the production up and running. This doesn’t really address that in any capacity.
True. I’d probably prefer to see the money go to a better performing company, but since there are like, 2 companies in the US that actually make semiconductors, there isn’t much other than starting a whole new company. Which, for $10B isn’t possible in this industry. So if the money is going to go to Intel, I at least want a cut of it, is my point.
We already got a “cut of it”. This is just redefining the “cut” we get is my point. Either way though you probably won’t ever hear the results of the cut. To get value from this cut the government would have to sell shares worth much more than they are now. You said something about a better company?
Smart bomb supply chain secured.
> the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company
> 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?
The answer is in the paragraph in between the two you quoted from. The money for the purchase has already been appropriated by Congress and awarded to Intel. The awards didn't previously have this giant string attached where Intel gives stock in return. But now they do.
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.
Isn't that pretty bad, Darth Vader style changing of previously agreed on deals ?
Not sure how anyone can believe anything that was agreed will hold in such an environment. :P
Yes, but its semiconductor industry so its complicated.
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.
New CEO wants to keep the fabs though. It was the board chair pushing him to cut the fabs.
That's precisely how private citizen Trump ran his businesses as well. Make an agreement with contractors to get work started knowing full well those agreements were never going to be honored. Instead, refuse to pay anything forcing contractors to renegotiate at much worse terms vs not getting anything at all. The whole time banking on these contractors not willing to fight in court. That was the art of the deal
The art of the deal isn't a deal. It's extortion.
> Isn't that pretty bad, Darth Vader style changing of previously agreed on deals ?
There has been some changing of deals on Intel's part as well, with indefinite delays on US fab buildouts the US passed a bill to subsidize. Now the US is taking some equity for its debt.
Far more dramatic Government intervention took place in 2009 when the US bailed out domestic automakers, including equity. Don't recall as much angst about that among the laptop class. Because Obama.
> Isn't that pretty bad, Darth Vader style changing of previously agreed on deals ?
haha, is this the first you hear of this Trump guy? He rutinely breaks deals, like all the fucking time. (I get that this was not his deal, he breaks those too)
A deal with Trump is worth nothing.
Imagine the stakes of the next election after such an environment
The sparks will fly
> Can somebody explain to me how the government made an investement, bought shares, but paid nothing?
Extortion.
Recent Supreme Court decisions have permitted the government to unilaterally cancel disbursements, even in flagrant violation of the plain text of law, impervious to preliminary injunctions, and then put up procedural hurdles to significantly increase the cost of reaching a final judgment in favor of the plaintiff. See, e.g., the most recent decisions issued this week in National Institutes of Health v. American Public Health Assn.: https://www.supremecourt.gov/opinions/relatingtoorders/24
So presumably the administration's deal was, give us what we ask for and you'll get the money Congress awarded, or don't and wait 1-2 years for any case to wind its way through the courts.
Also, the timing is mighty suspicious, with this NIH decision being published yesterday (21st) and the announcement happening this morning (22nd). I wouldn't be surprised if Intel's lawyers were waiting (perhaps slow-walking the admin) for this particular NIH decision, and when it came down in favor of the government advised the CEO the only way to get the remaining billions disbursed in any reasonable amount of time was to acquiesce to Trump's demand and close the deal.
I had seen that, but I don't consider that "paying nothing". That's paying something. I'm also confused how it's a "grant" if it's completely transactional. That's not a string attached, that's just a purchase. So I guess it's just political spin on all sides.
The thing you're missing is that it was different administrations offering the grant vs the "investment".
Boardroom politics...
Everyone saves face.
What does Intel get? I suppose it ensures that the grants aren't cancelled.
I think a better rephrasing is "government is giving $8.9B from the CHIPS act in exchange for a 10% stake in the company"
Depends on who you ask. Trump himself seems to think the US is getting 10% for free. I think that's a fair assessment given that these grants were already supposed to be paid out to Intel, without any kind of equity stake promised.
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.
> Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant.
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.
> Worth noting that Intel is the only company that had these kinds of shenanigans pulled with their grant.
So far...
Trump feels Biden gave intel billions for nothing. Trump feels he’s balanced the scales by getting 10% of Intel. Trump gets to spin it as getting 10% of Intel for nothing.
Win win for Trump.
Getting stock in exchange of grants makes more sense than "pure" grants.
This stock can later be sold, to benefit the taxpayer.
that's not a grant. That's just buying stocks.
It's effectively a grant. The US government isn't buying existing shares. Intel is issuing new shares and selling them to the US government - so actual money is being transferred to Intel (and existing shares are being diluted as a result).
That's just buying stocks (at-the-market offering).
Nope.
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.
I think you're maybe unfamiliar with what an ATM offering is; try googling it.
Fair point. The key issue in the thread, which I think we both agree on, is that yes, the government is giving money to Intel.
If someone from the Mafia comes to you and asks for a 10% share of your restaurant you better say yes.
When you're really familiar with extortion, everything looks like an opportunity for extortion.
Yes, but in this case the restaurant was already empty of customers on most evenings.
Breaking into an empty locked building is still breaking and entering.
So then it’s fine?
My point was that Intel is already in need of rescue investment all on its own.
I'm just pointing out a limitation of the Mafia analogy.
As long as there’s still cash, there’s plenty of stuff to loot.
Socializing a corporate venture with peace time debt seems counter to the ideals of free market capitalism. Even the takeover of "government motors" (GM) during the Great Recession left many concerned about government overreach. Boeing killed people with a bad product, and they only faced a fine without direct equity takeover.
The clearer picture comes from Reuters[0], as usual:
>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...
They're nationalizing it
> "The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars,” President Trump wrote"
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.
Arguably the alternative was the government just... not giving them the CHIPS Act money. (And there's certainly a point to be made that Trump altering the deal is... problematic.)
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?)
We haven't invested any public dollars into Intel, we just took 10% of it.
The US government is paying about $9B to Intel for this (on top of the $2B already paid).
> "About $7.8 billion had been been pledged to Intel under the incentives program, but only $2.2 billion had been funded so far. Another $3.2 billion of the government investment is coming through the funds from another program called “Secure Enclave.”"
The funds were already going to Intel. Trump just decided to demand 10% of the company for the already earmarked incentive programs. It was pure extortion.
> The funds were already going to Intel.
That's not a given - even under Biden: https://news.ycombinator.com/item?id=44993388
> 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.
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!
And now we see Trump taking over the US economy! He will not stop there, of course. If Intel folded, other companies of "national interest" will follow suit and Trump will appoint his friends to each of them.
Is the US going to sanction Intel for being a SOE now?
Didn’t the US invade Iran when they did this to their oil industry? (Yes I know 10% is different to 100%, but wow… I thought the US shun commandeering of private companies?)
Why is this a surprise?
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.
Taiwan.
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.
The surprise is the federal government acting like an unfair negotiator, substantially altering the deal after it had already been struck. Equity in return for investment grants was never a part of CHIPS, and was only made part of it by Trump who seems to have originally wanted to kill the deal because it wasn't made by him.
Buying Intel chips means supporting American government from now onwards. Lot of countries hate it
The question is can a US purchase help Intel turn things around? As a corporation Intel has really struggled for over a decade and has trouble with its foundry back even at the 10nm level. Will the US purchase have any impact on Intel reaching competitive levels with TSMC?
As a tax paying US citizen, I look forward to receiving my INTC.us dividend checks.
So, this happened just because one man (you know the one) decided it should happen? No vote or anything?
That is my understanding. The US king ”made a deal” with Intel.
Trying to ignore the politicking on this so it can be clear on what exactly is “happening”.
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...
First, this is different because this was not what was agreed when Intel sought the grant. So I reserve the right to see as ‘bad’ a coercive action.
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
I don’t think people are conflicted over the math. The nature of this, the manner in which it went down, and the implications for the future are what people seem to care much more about.
Let Intel fail. Other companies will buy state of the art(ish) EUV fabs at a fraction of the normal cost when they're liquidated in bankruptcy. Then we might have several companies on the leading edge.
How is this not a regulatory conflict of interest? Or strong arming them to change practices under threat of pulling all the stock out?
At the risk of sounding a bit flippant, there's a popular 2018 headline from The Onion that becomes increasingly salient as time passes:
Trump Claims He Can Overrule Constitution With Executive Order Because Of Little-Known ‘No One Will Stop Me’ Loophole
https://theonion.com/trump-claims-he-can-overrule-constituti...
> Of the total, $5.7 billion of the government funds will come from grants under the CHIPS Act that had been awarded
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
Looks like they will get common shares (not preferred). Could Intel create a new share class for this investment (with different voting rights)? Does 10% give the government a controlling interest?
Did Lip Bu Tan initially try to say no to this? You'd kind of expect him to say no. Is that why Trump tried to oust him? Is Trump trying to oust him the reason Intel are now accepting this?
> You'd kind of expect him to say no.
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.
The investment from Softbank is interesting because ARM is also a portfolio company of theirs. ARM has said they want to make their own chips now so Intel might be a good candidate for that.
It's a way around the "horrible horrible" CHIPS act.
The U.S owns 10% of Intel now? What does that make us... $20 richer?
Today we are all nana... against our will.
Comrades,
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 wasteful and destructive capitalistic competition, Intel’s revolutionary “people’s processors” (soon to be developed) will ensure that the world’s most advanced AI chips are made in America. And priced within the reach of every US worker.
Viva la revolution! Viva Intel!
I am expecting shareholders to be very upset. If, as Matt Levine likes to say, everything is securities fraud then this is going to court one way or another.
The hammer is right here, now where did I put that sickle?
For a party who talks constantly about freedom, this administration is sure doing a lot to encroach on said freedom, of both individuals and corporations.
Any strings attached? If not, ironically a big chunk of those US tax payer dollars will likely end up in Taiwan/TSMC.
There's an option for the US to buy an additional 5% if Intel sells so it doesn't have majority ownership of its fabs.
But I think the real strings are a soft, private insistence that Intel won't be allowed to sell itself overseas.
The Defense Production Act and the Committee on Foreign Investment in the United States would be used to prevent the sale. The carrot is the whatever $18B in grants and investment, the stick is legislation that allows the government to prevent a sale.
https://home.treasury.gov/policy-issues/international/the-co...
No strings common share purchase means cash in hand, which implies Intel can spend it on any operational cost, including buying billions in TSMC wafers (which they already do).
Atlas Shrugged ...
Well, it's certainly newsworthy. Bizarre.
My first thought, how many Trump people just front ran this?
You mean did insider trading?
yes :) ,i got the terms mixed up.
No you didn't, front running is a specific form of insider trading and you used the term correctly :)
Probably enough to lead to meaningful indictments and convictions, which will never happen.
As of last week: https://bsky.app/profile/unusualwhales.bsky.social/post/3lwf...
I give you 3 months before the US government takes 10% of Google, Microsoft, Amazon/AWS, Nvidia, AMD and Apple.
For Nvidia this is already happening. They're taking a chunk of the profits of Nvidia operations in China. The Chinese have been prescient when stopped any Intel and Nvidia chips in government and strategic areas of China.
Those companies are not fighting for survival.
The gov already took a big part of Nvidia profits in China.
Survival is not the issue, it is about control. Today 10% Intel stake (non-voting, bought with already-promised CHIPS funds) puts the state on the cap table, and the 15% skim on Nvidia and AMD China sales swaps export licenses for tribute. The HN usual knee-jerk downvotes on anything about Trump admin criticism, just help normalize it.
would be cool if we didn' t reward companies with billions of dollars for offshoring production and labor to maximize profits at the expense of american jobs, and apparently, national security.
So did they buy these stocks from Intel itself?
Does that dilute the share other intel stock owners have?
This stuff always confuses me.
The stocks were not bought. Intel's board literally voted to give 1/10 of the company to the American government. Any sort of other take is propaganda. The claim that the shares were in exchange for grant money is false. Grant money is free and requires no payback. Congress authorized grants, not equity investments.
> So did they buy these stocks from Intel itself?
in a sense, although buy is not quite the right word. there were grants promised to chip manufacturers under certian conditions. trump decided to wave those conditions just for intel in exchange for 10% of the company.
> Does that dilute the share other intel stock owners have?
no, the shares were already existing and owned by intel.
Seizing the means of production!
Da, Comrade!
The oligarchs resulting from the fall of Soviet Trumpistan are going to be the most obscenely rich people history has ever seen.
They already are, in a replay of the robber baron era.
Well, the current administration and the National Socialists do have some things in common.
Поздравляю с окончанием школы !!!!
Five nodes in four years coming right up.
At least in 2008 there was a financial crisis. This feels like somebody has stock in intel.
Not that far from having full-out state-owned enterprises the way things are going.
It's interesting that Trump's announcement of this includes a claim that the government has acquired this 10% stake without paying anything for it. Of course, that's probably just bluster to impress the more impressionable part of his base, but I imagine Intel's CFO isn't going to sleeping well for the next few years.
Comrade Trump seizing the means of production, glory to our leader
No board seat or governance rights. What's the government getting out of this? Trump brags of a good deal? Might profit in the future? Or _actually_ although technically there's no governance, government might actually influence how Intel is run?
Besides politics and image, are there any benefits?
This is an absolute failure of free market capitalism. The company which was at the forefront of the entire stack for decades (hardware design, chip design, chip fabrication, software design), headquartered in the freest modern country, slowly turned into a husk unable to compete with upstarts on the other side of the world.
Why is it that a fab is so much more exorbitantly expensive to run in US than in Taiwan? Wasn't higher labour cost supposed to bring disproportionately higher productivity? Why did Intel not build ultra advanced fully robotic fabs? Where's the innovation? Why did no other competitor crop up in the US when it has been clear for a decade that Intel is lost?
Where is DOGE while this is happening?
Exposing a US asset and getting his family kidnapped by the Taliban
https://www.propublica.org/article/doge-musk-mohammad-halimi...
Ahh, yes, conservatives please lecture me about the utopia of the free market and how those evil socialists that take control of the means of production just screw it all up.
Number 6934 on my list of "every accusation is just projection".
Never take government money. RIP Intel.
i remember when this happened during an actual crisis, in 2008, republicans all over cried on the radio day after day, arguing that it's socialiasm.
But now, crickets!!
They were still complaining about Solyndra over a decade later.
The Republican party of 2008 bears little resemblance to the one of 2025, especially on economic issues. Many in the party have changed their views over the last decade+ on industrial policy and the libertarian wing of the party has very little influence now. It's really a striking shift.
What remains of the "old guard" is, in fact, loudly complaining about this move:
https://www.nationalreview.com/2025/08/the-government-should...
I am a republican. I even voted for trump. I am categorically against this. In fact, he should be impeached for it, and I have already called my representative (a democrat) telling her she has my vote if she introduces articles of impeachment against him. This is a red line for me. My parents left a third world country to not have to deal with this shit.
Everybody lives on their own personal reality nowadays, but for me the internet has been incredibly loud about it.
For me as a vague 1920s maybe-the-SocDems, I see this as vaguely positive. A return to pragmatism from market dogmatism.
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.
This seems more vaguely 1930s maybe-some-other-ism.
Maybe in this specific case, but I don't see this kind of policy as necessarily ideological.
It's just requires the government to not be totally market dogmatist.
Exactly! I know there's a lot of Trumpers/MAGAs on HN, so I'm sincerely asking them: How is this not the evil thing you guys constantly lecture us about (socialism!)?
Here's some emergency reading
https://theupheaval.substack.com/p/its-not-hypocrisy-youre-j...
It's not the evil thing because it's "their side" doing it.
Because they only lecture about socialism as a red herring. They only care about power and obtaining it. Fascists have no actual principles other than more power and hatred of others.
Capitalism with Chinese characteristics
Discussion from yesterday about Intel's and Trump's woes
https://news.ycombinator.com/item?id=44978356
if you're the US government, this makes sense. invest into your own chip maker.
I’m pretty sure that’s socialism
Socialism would be worker ownership.
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.
I think the phrase i heard before is State Capitalism. But i could be wrong
Yes. State capitalism is definitely the word.
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.
So by that logic, state provided healthcare is not socialism. But a labor union providing health insurance is socialism.
Can we get some of that state owned health care :-p
If we go by Marxist definitions, universal healthcare, universal education, etc. are communism, not socialism ('to each according to their need', which I interpret as capacity to provide a return on an investment of resources by society in one).
We have really little socialism in modern society, instead we have market systems combined with elements of communism. The only socialist elements we have are copyright and patents (you get them for contribution, so it follows the Marxist maxim characterizing socialism 'to each according to his contribution').
It's really a strange thing that communism, this hypothetical post-socialist stage of development, is so easy for states to adapt and so uncontroversial that elements of it are implemented today on a large scale, everywhere from the US to Africa, when socialism which Marx imagined as the stage that would give rise to communism is a relatively small element of society. I suppose the software industry has eaten a lot of other businesses though, and that it in the end is dependent on copyright, so maybe we actually are in the socialist stage, only with large middlemen intermediating 'to each according to his contribution' part. Socialism but with capitalist middlemen.
I’m going by the GOPs definition where “Socialism bad” because bigger govt. I realize there are internal inconsistencies of that definition.
> So by that logic, state provided healthcare is not socialism.
Well, it's not. It's only socialism if the state decides to provide it for everybody.
A state-owned corporation isn't necessarily socialism.
(And yeah, you say it like if it's a bad word...)
nationalism
Unless it comes from the Commie region of Asia, it's just sparkling state capitalism.
America sovereign wealth fund.
Trump unitary executive privatized wealth fund using US taxpayer money.
And a free 747 that won't be useful or ready during this term, but hundreds of millions of taxpayer money will be poured into for the "library". The VC-25Bs were already under construction.
Intel as a store of value?
So Intel is an SOE now?
this is a step away from capitalism and it harms any startups destined to compete with Intel and discourages investment in the startup ecosystem that might compete with Intel, and punishes investors/customers in/of any of Intel's competitors.
Unless the descriptions of the deal I've seen are wrong, this seems random and pointless. No new money. A lot of the support for Intel foundry, and a lot of the people in that are gone now. So what's the national strategic interest in Intel? Pat Gelsinger must be happy he didn't stick around for this shitshow.
Any reason to think that Trump didn't just buy a bunch of options before demanding this?
I've lived long enough to see the Republicans become the socialist party
It's also pretty nationalist.
How an anti communist govt slowly is adapting communistic ideas !!
I'm all for the government getting stakes in companies that it invests in (see below), but I find it really odd that we already awarded this money to Intel through the CHIPs Act and, instead of disbursing the funds as a grant, they converted it into a stock purchase. I don't like that they're not going along with the law, although that's par for the course.
On getting a stake, I find it odd that the right wing (or at least Trump?) is all for getting stakes in businesses, as that seems so counter-intuitive to what they're about. Personally, I think that if the government is putting billions into strategic industries, taxpayers should get a financial return, not just vague promises of jobs or “competitiveness.”
I am surprised there is so much talk about China. Can we just focus on our own business here in the US: fixing the roads, bridges, schools, cities, etc.? Let’s make America greater first!
Ironic that Trump looks to be succeeding in killing both Democracy and Capitalism, which rightly or wrongly are seen as it's greatest strengths.
If they go what does it leave the US with that's any different from any other country?
Knowing Trump.. that 10% stake will be sold to one of his cronies. It's just a matter of when.
US Senator Bernie Sanders backs Trump plan for government stake in Intel — https://www.aljazeera.com/economy/2025/8/20/us-senator-berni...
Guess capitalism doesn’t scale to the international level
The French government owns stakes in big corporations. And why not, why wouldn't the public own some stake and government (us, in theory) have some control?
Airbus being an example.
Is it because Trump did it? If Biden had done it, the comments from the right would sound like the sarcasm in this message thread.
Trump's temporary, he's not taking his stake home when his term expires.
The issue isn't the US taking a stake in Intel. The issue is Trump running a protection racket where he threatens to use the entire force of the federal government against a corporation or institution unless they pay some very large amount of money. This is the same tactic he's using with universities and law firms.
If Biden had done it, SCOTUS would have struck it down as a violation of the Takings Clause or any made up theory.
I despite/abhor this administration and their politics, but this is a good move.
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.
I swear Im not trying to be glib or dismissive, but I honestly think you dont know what "privatization" means, this is the exact opposite.
Maybe they mean "privately owned by the government". Which I guess is usually called nationalization
Exactly. This amounts to a partial nationalization of Intel.
No offense taken, my understanding of the term could was wrong. I hope it doesn't take anything away from my argument though. I think I wanted to use the term "deprivatization" instead, I only remember this topic distantly from reading about communism and economics.
I agree. He should take control of Tesla, OpenAI, Palantir and Facebook next. Then privatize some of the leading quantum computing companies. Why do we even need venture capital if we can just build out an Office of Strategic Investment and control everything from the federal government. \s
It’s super debatable whether or not DARPA has done more for creating enterprise value in the US tech sector than sand hill.
At the least, without darpa the whole Bay Area machine would not exist today, so it’s at least necessary if not sufficient.
Not just darpa but nih, nsf, doe, onr, arl, nasa, and the national labs are definitively necessary causal dependencies on of every company and industry driving US national pride and all of the most valuable companies.
Even if the firm never takes a grant, their talent, supply chain, and component pipelines all depend on these grantor agencies thoughtfully allocating taxpayer capital at the national level.
Slippery-slope fallacy. The money to buy shares has to come from somewhere and the power of the purse is with House of reps. Someone like Trump can (and is-per this post) take stakes in random companies, but that's our democracy. You wouldn't say "bomb canada, france, england and norway" because the military bombed one country right? You make sure congress checks and balances that power.
If the government takes over those companies and they don't do well, it means lost jobs which means lost elections too. There's a risk calculus to be had.
The current policy of never intervening or taking ownership in companies.. unless they are "too big to fail and start failing" only benefits the companies.
No, that was sarcasm that employed a slippery slope argument. I was not seriously suggesting that the federal government will buy Facebook. I was suggesting that we should avoid a pattern of behavior (slippery slope) that might lead to the socialization of other companies. Giving Intel a grant to keep it from failing is very different from demanding 10% in exchange for funds to keep it from failing.
Incredible how fast Trump is changing political culture - wasn't so long ago that protectionism, economic coercion, military-civilian fusion, state owned enterprise s was denigrated as 'communism' and hence beyond the pail. He's even mooted the possibility of redirecting tariff revenue directly to the people, an act of Chavez-esque socialism which would have been unthinkable a year ago. Anything can happen with this administration, I suspect that is the reason why the American people elected him
Yet another bailout from the US government as accurately predicted. [0]
[0] https://news.ycombinator.com/item?id=44676641
Good luck, Trumpistan people.
This is one of the saddest days of my life.
Oh my god, the us taking ownership of a company, instead of giving them free money? Under the trump administration?
A government stake gives confidence in the company’s survival that a one-time cash dump for the CHIPS act couldn’t.
It’s not a lot different than what car and financial companies got in 2009. They were about to go under because no one thought they’d be around long enough to get out from under and deliver goods or pay their debts. The government stake enabled them to keep operating and eventually recover and then the government returned the stake to the market (or will soon w/ Fannie & Freddie).
Good. It's very much a "Heartbreaking: The Worst Person You Know Just Made a Great Point" situation.
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.
Would you still be saying this if Intel wasn’t floundering as badly as it is today? There’s no equivalent push to take any level of control in AMD.
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.
> Would you still be saying this if Intel wasn’t floundering as badly as it is today
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.
I don’t know, it sounds like the US gov’t just stole $11 bln from Intel shareholders - while intel is failing - while promising nothing?
It's a similar amount to the stake from the CHIPS act.
And?
And fundamentally, I believe that any industrial stimulus should come with a mixture of government ownership as well as claw-back provisions should interests contravene national security.
Edit: cannot reply to you.
This deal literally comes with claw-back provisions.
and does any of that seem to have anything to do with the current deal, or align with current legislation?
Or is it just a transparent shakedown?
The current deal comes with claw-back provisions, but I am more interested in the precedent it sets.
This plus the CHIPS+IRA has now set the precedent for states and the federal government to build an SDF. I don't trust this administration aside from a couple staffers, but this allows us in a post-Trump era to build SDFs and return to the industrial policy norms we had in the US before the 1980s with Reaganomics.
CHIPS and IRA themselves were able to be pushed by the Biden admin becuase Trump 1 set the precedent to ignore traditional norms.
The government support should have come in the form of a real competitor. Intel got this way because they had no competition - nobody thought a domestic EULV manufacturer would be an American prerogative in 20 years. All the customers for dense silicon were fine importing it from Taiwan.
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.
So tell me your plan that would create a competitor for Intel from scratch that could be making decent chips in 5 years? 10 years?
Given the circumstances and the relatively low dollars involved, it would be interesting to see the experiment: $10B darpa program to establish a scalable fab ecosystem in 5 years via consortium.
This was how the internet was created, darpa stitched together dozens of performers to get the key ingredients (eg bbn gateways, academic subnets, experimental applications, protocol research.
They even led the last ditch marketing Hail Mary after years of no-one caring about the program besides the zillions of engineers from all around building it by organizing a press day in a hotel ballroom for a demo day.
As a taxpayer I’d strongly support 5B/.1% of the fed budget for a few years just to learn what happens in the attempt.
$5B wouldn’t be nearly enough to create a leading edge fab. Estimated cost for TSMC is $20B.
China has been trying and failing to build a competitive fab for years, has the rare earth minerals in its back yard, etc and can’t do it.
The second issue is, who exactly is going to use these fabs once they are built. One issue that Intel has is that its “customer service” sucks. TSMC will bend over backwards as a partner. No one wants to work with Intel.
Can you imagine Apple or Nvidia wanting to work with a government owned chip fab?
Is it too much "magic" for the moneyed geniuses down at Apple? Or is technology not quite their wheelhouse anymore?
Do you apply the same standard to Nvidia, AMD, Microsoft, Amazon, Google and Tesla who are all trillion dollar market cap companies (besides AMD) who design their own chips and they are manufactured by TSMC - or for Tesla moving to Samsung
What’s your suggested remedy?
Deregulate RISC-V, threaten Intel with loss of IP if they can't profit on fabs, threaten to cut Softbank off of American companies if Masayoshi Son won't onshore RISC manufacturing.
There's soft-power coercion left on the table, the only thing we buy with Intel stock is a C-suite's dinner bill.
> Deregulate RISC-V
What does that even mean?!?
It's already OSS and royalty free. I've participated Series A and B rounds on startups working on RISC-V design.
> threaten Intel with loss of IP if they can't profit on fabs
Investing in Capex is inherently going to put you in a loss for several quarters
> threaten to cut Softbank off of American companies if Masayoshi Son won't onshore RISC manufacturing
He doesn't own RISC-V IP.
-------
This is why I hate HN now. ICs with no domain expertise think they should have a voice.
What if the government demands they start paying dividends?
Ideally, a government or SDF holding is not a majority holding, but a controlling stake.
Generally, a SDF is expected to take decisions that help develop an ecosystem or market, and help act as a check against primarily profit-driven motives.
Assuming a stake is part of a well managed SDF similar to Temasek, Mubadala, or the Master Trust, then I'd tend to trust the decision being made.
That said, I also recognize that this administration is severely disorganized and amateur, so I wouldn't trust their choices. But, I do feel this sets a precedent to allow both the federal and state governments to build SDFs, especially in a post-Trump world.
For example, the CHIPS and IRA were able to be pushed thru by the Biden admin because of the trade norms the Trump 1 admin created and upended.
Also, good question - because as your rightfully pointed out, IME - deep down, I don't think dividends align with a net corporate benefit.
I should probably do the math, but excuse is I'm a VC - it just doesn't make sense from a long term perspective as I pitch to LPs about my thesis.