Intel and US Government Investments in American Companies
Last month’s announcement that the U.S. government had obtained a 10% equity stake in U.S. semiconductor giant Intel raises big questions about the government’s role in the market economy.
The government historically has invested in (and sometimes briefly taken over) firms in key sectors in response to national crises—most recently, the 2008 financial crisis and the COVID-19 pandemic. Such investments have been justified as needed to prevent a systemic collapse that would have far-reaching and catastrophic consequences beyond the struggling companies.
Government corporate investments have also occasionally been made in support of other goals, such as promoting industrial policy and national security. The Intel investment falls into that category.
In deciding whether to pursue further equity acquisitions in tech companies, the government may wish to consider potential economic downsides associated with such acquisitions. It may be that focusing instead on further deregulatory and tax reform, which the administration is already pursuing, would be a better policy to strengthen the U.S. economy.