Uncle Sam shouldn't own Intel stock
82 comments
·August 24, 2025GeekyBear
Didn't we already cross this particular Rubicon during the auto bailout a decade ago?
Other examples:
> Since the 1950s, the federal government has stepped in as a backstop for railroads, farm credit, airlines (twice), automotive companies, savings and loan companies, banks, and farmers.
Every situation has its own idiosyncrasies, but in each, the federal government intervened to stabilize a critical industry, avoiding systemic collapse that surely would have left the average taxpayer much worse off. In some instances, the treasury guaranteed loans, meaning that creditors would not suffer if the relevant industry could not generate sufficient revenue to pay back the loans, leading to less onerous interest rates.
A second option was that the government would provide loans at relatively low interest rates to ensure that industries remained solvent.
In a third option, the United States Treasury would take an ownership stake in some of these companies in what amounts to an “at-the-market” offering, in which the companies involved issue more shares at their current market price to the government in exchange for cash to continue business operations.
https://chicagopolicyreview.org/2022/08/23/piece-of-the-acti...
pton_xd
Yes and the scale was far larger, over $80 billion given to GM and Chrysler. GM was majority owned by the US government for a number of years after that too.
Fricken
The other day I went down a rabbit hole reading about the history of insulin, and learned about the Canada Development Corporation:
>The Canada Development Corporation was a Canadian corporation, based in Toronto, created and partly owned by the federal government and charged with developing and maintaining Canadian-controlled companies in the private sector through a mixture of public and private investment. It was technically not a crown corporation as it was intended to generate a profit and was created with the intention that, eventually, the government would own no more than 10% of its holdings; it did not require approvals of the Governor-in-Council for its activities and did not report to parliament. Its objectives and capitalization, however, were set out by parliament and any changes to its objects decided upon by the Board of Directors had to be approved by parliament.
The CDC was created as a result of Walter Gordon's Royal Commission on Canada's Economic Prospects, and the 1968 Watkins Report commissioned by Gordon, in an attempt to redress the problem of foreign ownership in the Canadian economy by stimulating the development of Canadian owned corporations, particularly in the field of natural resources and industry
About 31,000 private shareholders invested in the corporation. An early purchase of the corporation was Connaught Laboratories, the original manufacturer of insulin.
Major investments owned by the CDC included holdings in petroleum, mines and petrochemicals including Polymer Corporation, an asset transferred to it by the Canadian government. By 1982 the Canadian government had a 58% stake in the Savin Corporation.
In 1986 the Corporation was dismantled as part of the Mulroney government's program of privatization.
https://en.wikipedia.org/wiki/Canada_Development_Corporation
godelski
> could not generate sufficient revenue to pay back the loans
Governments aren't people. If I gift you money, that money doesn't come back to me. But if a government gifts someone money, it makes its way back. As long as that money gets spent, there's returns. Even if you die, and even if you don't have that $14m for the death tax, that money still pays dividends back.
The only way it doesn't is if the economy crumbles or that money is taken out of the entire economy (which is much harder to do considering the dollar being the current global currency). So basically you need to light it on fire.
You can do things to slow that flow but it does come back. A low interest loan is just increasing that flow and this is why a negative interest rate can still generate a return. A company can fail and there'd still be returns through taxes in the mean time. The money doesn't just evaporate.
I think a lot conversations about money get weird because we over generalize what money means, applying money's context for an average person more broadly. But money has a very different context when you're talking about governments, corporations, or even billionaires (due to the shear amount). Nor are those examples the same either.
In this case I think it matters. The government already has a stake in Intel, and in all companies. Shares only decrease the pie available to the public while increases the ability for government official to do insider trading and increases nationalization.
JKCalhoun
What happened to Intel? Did they need a bailout?
downrightmike
My intel powered workstations from 2008 have chips that are more than decent enough for modern computing.
But in reality, they gave up on R&D, Missed Apple mobile chips and then put a lot of MBAs in top leadership positions to make their financial schemes work. Those schemes did not work and they were left without technical leadership. When they got the tech leadership, the board just gave up and fired him and brought in a chop shop CEO to part intel out.
For some reason, the US admin thinks this is a good buy. You probably would too, if you bankrupted multiple casinos.
Intel is going the way of SunBeam, Sears and Toys r Us. The board failed to stop that. And failure attracts more failure.
AnimalMuppet
Yes, but no. The bailout was companies that were headed for bankruptcy. Is Intel? My impression is that they're a lot further from it than GM and Chrysler were.
fooker
Intel had been trading below its cumulative physical assets for a pretty long time.
This means the market believes they have a path to bankruptcy. Since markets are forward looking, how close it is to bankruptcy does not matter too much. In this case they needed money and the government provided a relatively low amount for a pretty significant stake in the company.
daft_pink
I would agree with your approach if we were simply discussing whether the government should fund intel, but we’ve already committed to funding intel via the government. Pulling back would hurt intel and our interests. Now that intel has become reliant on our promised funding, it makes sense to attach conditions to the funding we need to do instead of just handing it out while getting nothing in return.
Fade_Dance
The first thing that jumps out is that it is impossible to avoid the absurd juxtaposition of a republican led major national corporate stake, after a decade of the auto bailouts being used as a poster child of policy that the current party in charge doesn't agree with.
Moving on from that, you make a good point that it may be the best compromise if the original deal is off the table. That said, in my eyes the implementation could be better. On both a practical and ideological level, I think it would behoove the dealmakers to lay out clear exit conditions. That could look something like anything from signing a covenant with Intel to freeze dividends and corporate buybacks and pay down debt (which is dangerously high for them currently), and then once the corporate balance sheet gets to a safer level, the US gov could run a public auction for the equity once that strike level is hit. I'm sure they could come up with something palatable. What's unexcusable is to apparently enter into a seemingly permanent zone of CCP-style state corporate capitalism without clearly laying out what that means for America going forwards. As an average citizen, I certainly have questions about the precedents being set, and to me it just looks haphazard and off-the-cuff.
mlinhares
> The first thing that jumps out is that it is impossible to avoid the absurd juxtaposition of a republican led major national corporate stake, after a decade of the auto bailouts being used as a poster child of policy that the current party in charge doesn't agree with.
The only absurd here is to think republicans care about anything other than power . Doesn't matter what they did or said yesterday, what matters is what can they say and do today to remain in power and enable their deep pocketed donors to make more money and gain more power.
People really have to stop thinking there's anything there, there's nothing, its all about acquiring and using power. Trying to come up with ideological reasons as to why they do this or that is useless.
Fade_Dance
>The only absurd here is to think republicans care about anything other than power . Doesn't matter what they did or said yesterday
Right, but it's an absurd juxtaposition when taken at face value none the less. I agree with what you said, but my point was more about other possible structures for the deal rather than political conclusions. I was attempting to brush aside the political considerations and take a somewhat tabula rasa approach, not spur a partisan political conversation, which clearly I failed at by mentioning the absurdity in messaging.
lisbbb
Given what Democrats have done in the name of consolidating power, I really don't think you have an argument against Republicans here. We're in the early stages of de-weaponizing major institutions like the FBI and DOJ right now.
gonzopancho
The auto bailouts were started by Bush
Fade_Dance
Absurd all the way down.
Perhaps I should have nixed the political aside at the top. Wasn't my intent to bring that to HN.
righthand
This is misunderstanding what really happened. The oroginal agreement with the CHIPS act is that if your company is profitable post expansion funding then you will profit share with the federal government. Trump changed that original agreement to one of stock ownership. Now the federal government can reneg the deal by selling back for their money any time. Arguably more dangerous than profit sharing.
It was never a nothing-in-return agreement, that is fiction.[0]
[0] “Biden to require chips companies winning subsidies to share excess profits” >> https://www.reuters.com/technology/us-require-companies-winn...
godelski
> if your company is profitable post expansion funding then you will profit share with the federal government.
I mean I agree with you but even that article is talking about how it's not a free handout. It never could have been. A government could hand out money unconditionally and they'd still get a return as long as taxes exist. Intel's (or any company's) success results in them paying more taxes. Not just corporate taxes either.
PhantomHour
The entire point of the funding is the strategic benefit that Intel's fabs in the US provide. That's the thing the US would get out of it.
Also consider: Who is the $10 billion coming from? Because it's not Intel. Intel just prints the shares out of thin air. This is Trump stealing $10 billion directly from Intel's shareholders, who get nothing in return because Trump is legally required to disburse the CHIPS Act money.
godelski
It's also just a complete misunderstanding in how a governments vehicle for investment works compared to a person's.
A person invests in a stock, hopes it goes up, and makes a profit (or loss) when they sell. That money isn't real until a sale occurs.
A government gives a grant and gets a return tomorrow and every single day of the company's existence as well as every single day each employee exists (even if the company doesn't). If a company exists, it pays corporate taxes. If that company has employees (as every company does), it pays payroll taxes. If that company has employees, they pay income taxes and various forms of consumption taxes.
IDK why we act like a grant is akin to lighting money on fire. Governments don't give out grants for nothing. They're still benefiting from it. Sure, the vehicles for return are different from a standard investment but also a government isn't a person. Well I should take that last part back. A government is a person in an autocracy (monarchy/dictatorship/theocracy/etc), but that shouldn't even be on the table.
johnecheck
> that shouldn't even be on the table
I wish that were so.
sieabahlpark
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srvo
The problem here isn't that the government gets involved in businesses. That has always been something they do.
The problem is that these days they do it capriciously, without any sort of plan or intention.
The government played a foundational role in supporting the early stage research that enabled companies like Intel to emerge. Underwriting that sort of long-term investment that wouldn't easily attract commercial capital is a great place for them to be.
Meanwhile, is it even the case that the American chip industry is declining? Apple, Nvidia, and Google all have significant chip manufacturing operations. And this isn't an industry I even follow particularly closesly.
recursivedoubts
this is the logical conclusion of outsourcing: we kept giving away the low end electronics and now we can't compete on the high end w/o government subsidy
the supply chain moved to asia and the just so stories about ricardian free trade + an inflated stock market made everyone believe, while the ultra-rich got ultra-ultra-rich
and now we sit down to our banquet of consequences
lisbbb
Now do H1Bs and offshoring.
x0x0
From my pov, it looks more like intel shit the bed repeatedly.
Missed on: mobile, custom chips in the data center, graphics cards, ai, and building out fab services they can sell.
Meanwhile, they took at least 5 years off of making their chips faster, and we're treated to the absurdity that the m-series chips are as performant in single core as anything Intel can build on a power budget 1/10th of Intel's.
I'm not sure what that has to do with outsourcing? It looks more like a comprehensive lack of execution.
yahway
TSMC was funded by government. The cost requirement for new fabs is beyond the funding private enterprises can muster. Perhaps through funding, years down the road, it may make sense. This isn't about Intel IP, it's about manufacturing high end chips on US soil.
x0x0
it's less than ideal to have the sole company capable of making the best chips 81 miles off the coast of China.
bix6
Are ARPA H, SBIR, NIH grants, etc. going to start taking equity stakes as well?
antonymoose
Why are we socializing risk and privatizing profit?
Seems like a bad combination to me, a net positive tax payer.
bix6
I think you should research the programs a bit to understand why they have been setup this way.
Everyone benefits from more medicine, weapons, food, etc.
null
aspenmayer
So why aren't the shares being given to the public?
like_any_other
Sure. Now make the same argument for TSMC, SMIC, and Samsung, and see if their governments listen.
tokioyoyo
All those three, from what I can see, is a bit different though. Samsung is basically a part of the government, because of its history. TSMC is the market leader, so it’s in government’s best interest to protect its future.
Chinese large scale investments are a bit different. It’s not just SMIC who gets a lot of funding, but others as well, so they can still compete with each other, until the winner is chosen and the others fade away. Similar to what is happening in EV market in China.
Intel… there is a decent chance that company fails even after this investment. They basically need to force other companies to use Intel chips instead of competitors for them to be viable at some point.
sieabahlpark
[dead]
AnimalMuppet
Their governments don't operate under the same legal limits that the US government does.
like_any_other
But they operate in the same global market.
AnimalMuppet
Yes. So there are two considerations. One is competitive balance internationally. That is a consideration.
But you also have to consider whether the government has the legal authority to make the investment. For a country claiming a limited government and the rule of law, that is a serious consideration.
You seem to be focused on the first consideration, but do not overlook the second one.
dismalaf
So should the government give bailouts without getting any equity back? Only deal in loans?
Intel is strategically important. As nice as it is to pretend that the whole world plays by the same rules, that the free market exists everywhere and that we'll never to to war, there are bad actors and the US (rest of the collective West as well) need to ensure that we won't be completely crippled if China attacks a single island off their coast...
justonceokay
Is there a difference between this and nationalization? Just a matter of degree?
dismalaf
> Just a matter of degree?
That and when most governments "nationalise" corporations they seize them and don't give the owners/shareholders anything.
Starman_Jones
What are the shareholders getting out of this?
aspenmayer
> That and when most governments "nationalise" corporations they seize them and don't give the owners/shareholders anything.
First you get the money, then you get the power.
Money is fungible, but power isn't. Arguably, taking away my power is an affront to my human rights. Taking my money is an affront, but it never was my money to begin with, as I don't control the value or creation of it. My rights are inalienable.
Animats
It's socialism, after all, for the Government to own an interest in a company.
Covered yesterday on YC.[1]
boredatoms
We can finally get that universal healthcare then
aspenmayer
The healthcare industry doesn't need a bailout, though, so the US has no leverage to demand 10% of healthcare companies' stocks.
vjvjvjvjghv
The healthcare industry is receiving perpetual bailouts through drug import restrictions, tax deductions, subsidies and favorable legislation.
TehCorwiz
The healthcare industry as it is is dominated by parasitic middlemen sucking the money from both patient and provider.
bdangubic
The “US” you are referring to no longer exists. It has been replaced by a combo of North Korea and Venezuela :)
aspenmayer
> It's socialism, after all, for the Government to own an interest in a company.
> Covered yesterday on YC.[1]
> [1] https://news.ycombinator.com/item?id=44989773
The post from yesterday was news; this is commentary, as in, not a dupe.
To your point, it's arguably closer to state capitalism, which may be a distinction without a difference if you paint it with the same brush as socialism, but it's one worth mentioning.
https://en.wikipedia.org/wiki/State_capitalism
The name of the (sub)site we're posting on is HN; YC is the host. :P
Animats
The phrase "lemon socialism" used to be applied to the UK. The Government had managed to acquire the steel industry, the railroad industry, and the auto industry - all dying industries in the UK. They became British Steel, British Rail, and British Leyland. The end result wasn't good. They turned into jobs programs.
Eventually those were privatized. Now, the railroads are being socialized again.
aspenmayer
It's a pendulum effect, with nationalization on one end, and privatization on the other. If capitalism and money itself is the best organizing principle that works around the world, it does limit the opportunities for change and growth. Socialism doesn't have a counter to the market principle, so they can only incorporate it. The US has a branding problem; freedom ain't free, but nobody even votes, so we earned what we got.
crooked-v
"capitalism with American characteristics"
aspenmayer
> "capitalism with American characteristics"
China is trying to beat US at its own game. US (or at least its current political leader) is trying to beat Russia at its own game. Russia is trying to remain relevant. Russia is the muscle, China is the finance.
China needs Russia just like Google (Chrome) needs Firefox. Without Russia around, China would get all of the attention instead. Without Firefox existing, Google would have no counter to antitrust allegations in the web browser space.
Anything you can do, I can do better. I can do anything better than you.
No, not like that!
It's like that Spider-Man meme where everyone is Spider-Man pointing their fingers at each other. All the power structures are mirroring each other. It's all kayfabe, all the time. Everything is wrestling.
https://www.nytimes.com/2016/05/27/magazine/is-everything-wr... | https://archive.is/muwUp
krapp
Unless the workers own the means of production, it isn't socialism. The government is just another agent of capitalism here. Can we call this sparkling capitalism?
testrun
I think this war is lost. The word socialism means different things to different people. It all depends on where you stand and what you are looking at. If you are on the far right, most things the government does is socialism. If you are on the far left, everything the government does is to support capitalism. And in between the two everything goes.
johnecheck
I frequently say the same thing about the word Capitalism. (Communism too). They're second only to 'god' in terms of historical baggage.
If you say 'I like Capitalism', a significant minority will hear 'I love US imperialism and hate nature', despite that almost certainly not being what you meant. Similarly, if you say 'I like Communism', many hear 'I love dictators, gulags, 5 year plans and famine'.
A word of advice: if you actually want to have valuable political conversations with people, don't start by identifying yourself with ideology that's arguably responsible for various atrocities and millions of deaths.
vjvjvjvjghv
When I read the comments I am getting the feeling that "socialism" is bad but nobody agrees what it is.
https://archive.md/hTITI