Looking at the Intel Deal: The US Deficit Has Forced Government to Look at Subsidies and Bailouts Differently

The U.S. government did not simply “buy” 10% of Intel. Instead, it acquired a 9.9% stake in Intel by converting $8.9 billion in existing, unpaid CHIPS Act grants ($5.7B) plus funds from the Secure Enclave program ($3.2B). This effectively turned what had been “free” grant money into equity — not a handout without accountability, but a stake in the company’s future success.

I am generally not a fan of government getting too close to private enterprise, but this has gone on for decades for many different reasons — usually without the accountability of a deal like this. Think of the tens of billions of dollars given to industries over the decades with no fiscal return for the U.S. taxpayer.

With the Intel deal, the government’s stake is passive: there is no representation on Intel’s board, nor any governance or special information rights. All voting generally follows Intel’s existing board, with limited exceptions. At $20.47 per share, the deal came at a $4 discount to Intel’s recent closing price (~$24.80), giving taxpayers favorable positioning — and making the U.S. government Intel’s largest shareholder, at least for now.

The Trump administration frames this not as “getting in bed with Intel,” but rather as ensuring that the U.S. gets paid back while securing domestic chip production for defense and broader economic security. Intel, with its U.S. fabrication infrastructure, is a strategic asset. This is an unprecedented federal step toward ensuring America’s chip sovereignty.

The Intel equity deal is a departure from history. Traditionally, U.S. industrial policy leaned on handouts and tax incentives with no revenue return for the government. Whether in autos, airlines, farming, energy, or railroads, the pattern has been subsidies justified by jobs, defense, or economic stability — but not structured repayment.

With Intel, the government is, for the first time, effectively saying: “We’ll support you — but taxpayers deserve equity upside in return.”

The huge U.S. deficit is now forcing the government to rethink how it supports industry going forward. Historically, government support has largely taken the form of handouts, subsidies, and foregone tax revenue, justified by jobs or national interest but without direct fiscal return. The Intel deal represents a possible new playbook—one in which taxpayer funds are treated as an investment, complete with structured equity, warrants, and potential upside. If this approach extends to other critical sectors such as semiconductors, rare earths, or defense-related industries, U.S. industrial policy could shift from subsidy-based support to an investment-based model that directly benefits both the nation and its looming deficit. Ultimately, these outcomes depend on execution: government can be a force for good or for bad, and keeping politics out of these decisions will be crucial to achieving the best results.

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