Trump wants more deals like Intel's, worrying business community

The White House announced a near-10% stake in chipmaker Intel on Friday that converts government grants into an equity share.

Trump doubled down on the idea of similar deals in other sectors on Monday, telling reporters at the White House, "I hope I'm going to have many more cases like it."

The administration's approach upends a decades-old view of the U.S. economy, in which the government only took corporate stakes in rare emergencies like the 2008 global financial crisis and the subsequent bailout of U.S. auto companies. Intel is struggling, but still has a cash cushion of $9 billion and a market value of $105 billion.

To critics, the Intel move - along with the White House's pressure on the U.S. Federal Reserve to lower interest rates, its use of emergency powers to slap tariffs on imported goods and involvement in various mergers - threatens the U.S. business world's nimbleness.

"We're moving from a pure capitalistic economy to a much more state-engaged economy... That's a huge change for America and over where we've been. I've never seen an era like this," said Bill George, former Medtronic CEO and executive education fellow at Harvard Business School.

Trump said in a social media post on Monday that he would help companies that make similar "lucrative" deals with U.S. states, but did not provide details.

Columbia Business School professor Shivaram Rajgopal said on balance he thinks the Intel deal is a good way to support the chipmaking industry, noting how other companies benefit from favorable policies, such as Amazon AMZN.O not having to collect sales tax in many states for years. "That enabled Amazon to become a giant. Why is taking a 10% equity stake in Intel any worse?" Rajgopal said via e-mail.

However, the risks of the government's involvement were apparent in Intel's own regulatory filing on Monday, in which it laid out how the government's investment could potentially harm international sales, make it harder to win additional government grants, or subject it to additional regulations or restrictions in other countries.

In a video posted on Monday by the Commerce Department, Intel CEO Lip-Bu Tan said: "I don't need the grant," adding, "but I really look forward to having the U.S. government be my shareholder."

Some Republicans criticized the move, with Kentucky Senator Rand Paul calling the Intel stake a terrible idea.

"If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?" Paul said.

Analysts also questioned how the Intel deal will affect its customers, who might be subject to entreaties to buy Intel products in lieu of others.

"Is it conceivable that as part of something like this the administration might 'encourage' customers to use Intel’s capacity?" Bernstein analyst Stacy Rasgon wrote in a note last week.

INVOLVEMENT IN OTHER SECTORS

Intel is not the only company in which Trump has become personally involved.

The White House intervened to complete the purchase of U.S. Steel by Japan's Nippon Steel in June, taking what Trump called a "golden share" that gives Washington say over its operations.

It took a stake in rare earths company MP MaterialsMP.N, and brokered a deal with chipmakers Nvidia NVDA.O and AMD AMD.N to take 15% of revenue from sales to China of chips that had previously been prohibited. On Monday, White House economic advisor Kevin Hassett said the government could take additional stakes in other companies.

Companies beyond chips and defense could also end up issuing shares to the government, said Douglas Chia, an independent consultant at Soundboard Governance. "It's a step in the direction of turning publicly-held companies into state-controlled enterprises whenever the government feels like it, using 'national security' as the justification," Chia said.

No business issue seems too small to escape Trump's eye. He applauded American Eagle's controversial ad campaign for jeans featuring actress Sydney Sweeney, which some criticized for possibly raising genetic traits in a racial context. He suggested Goldman Sachs hire a new economist after the firm said consumers would eventually bear the brunt of Trump's import tariffs.

"The president of the United States is telling Goldman Sachs they should fire an employee? That's crazy," said Nell Minow, chair of Portland, Maine-based ValueEdge Advisors.

Numerous CEOs met with Trump shortly after his re-election in November 2024, and that parade of visitors has continued into his term.

Representatives from industry groups say their ability to find an audience with the administration comes through having CEOs from the largest companies reach out to the White House.

Even so, they have still found themselves blindsided at times, particularly around trade, where Trump has levied heavy tariffs on importers of overseas goods. A retail industry lobby group source said members are largely frustrated with Trump's trade policy.

The CEO meetings have yielded moments of spectacle, such as earlier this month when Apple APPL.O CEO Tim Cook gifted Trump a customized souvenir plaque with a 24-karat gold base mined from Utah.

The smartphone giant, valued at more than $3 trillion, has been trying to shift production from China, which Trump targeted in his first-term trade war, to India, a move Trump has also criticized. Apple has announced roughly $600 billion in planned investment in the United States, though the White House has suggested it could also build smartphones domestically.

The United States does not have significant capacity to make smartphones.

"I think companies are just starting to realize, how much control do you want to give up and how much ownership do you want to give up to the government?" Harvard Business School's George said.