The US government’s decision to invest $8.9 billion in a 10% stake in struggling chipmaker Intel has sparked intense debate over its implications on national security and the economy. The move, made under President Donald Trump, aims to shore up national security by providing a reliable source of chips for the military.
However, critics argue that this approach ignores decades-old mistakes and technological laggardry that have hindered Intel’s growth. Economist Scott Lincicome highlights several concerns, including the risk of Intel prioritizing government interests over its fiduciary duties, which could stifle innovation.
A closer examination reveals a more complex picture, though. The US is heavily reliant on foreign companies, particularly Taiwan-based TSMC and Samsung, for critical chip manufacturing. Stopping China’s AI efforts requires cooperation with these companies, making the investment in Intel a means to ensure a reliable supply chain.
However, this reliance comes with significant risks, including the potential for catastrophic consequences if the US fails to keep pace with China’s technological advancements. The stakes have shifted from short-term concerns to long-term implications that could be disastrous for the nation’s economic and security foundations.
By investing in Intel, the US government acknowledges its dependence on foreign companies and aims to guarantee the existence of a domestic chip manufacturing capability. While this move may seem like a silver lining, it comes with significant risks and raises questions about the government’s role in private business and the long-term viability of such initiatives.
Source: https://stratechery.com/2025/u-s-intel