Why the U.S. Government’s Investment in Intel Matters: Benefits, Risks, and What It Means for You

The role of the U.S. government often shifts during times of crisis. Normally, the markets determine winners and losers, but in situations like wartime or severe economic downturns, intervention becomes necessary. For example, during World Wars I and II, the government took control of railways and key industries to support the war effort.

In the wake of the Great Depression, the Federal Deposit Insurance Corporation was created to stabilize the banking system by taking over failing banks. More recently, during the 2007-09 Financial Crisis, the government intervened with major companies like AIG and General Motors to prevent collapse, stepping in as a shareholder to stabilize the economy.

Fast-forward to August 2025: the Trump administration took a new approach. It bought a 10% stake in Intel, becoming its largest shareholder. This move comes as Intel is critical for producing microchips vital for everything from laptops to self-driving cars.

Today, the motivation for this investment isn’t a crisis but competition with China and a push to enhance the U.S.’s chip-making capabilities. Last year, President Biden allocated billions to Intel through the CHIPS and Science Act, further solidifying government support.

Intel has played a crucial role in the tech world since its founding in 1968. Michael Malone, author of *The Intel Trinity*, notes how Intel set the standard for microchips, essentially leading the tech scene in Silicon Valley. However, in recent years, Intel has struggled to keep pace with competitors like Taiwan’s TSMC and South Korea’s Samsung, particularly in the smartphone and AI chip markets.

Jennifer Lind, a government professor at Dartmouth College, believes Intel remains the best option for the U.S. to regain its edge in high-end manufacturing. In her view, companies capable of producing advanced chips are extremely important, as very few exist in the U.S. Most others, like Nvidia and AMD, design chips but rely on TSMC for production.

Jacob Feldgoise from Georgetown University highlights that supporting Intel is key to mitigating risks from potential “foreign supply shocks.” There’s concern that a geopolitical conflict, particularly involving Taiwan, could disrupt access to critical semiconductor manufacturing. If Taiwan were to fall under Chinese control, the impact on global chip supply could be severe.

Besides supply chain concerns, there are national security issues too. Reliance on foreign-made chips in defense systems presents risks; vulnerabilities could be exploited, leading to failures in critical military hardware.

Intel’s CEO, Lip-Bu Tan, expressed gratitude for the government’s confidence in the company. Government backing, as Lind points out, can spark growth. Taiwan’s semiconductor industry is a prime example of how targeted support can drive success. Similarly, John Dallesasse, a professor at the University of Illinois, advocates for government investment in chip manufacturing, noting zero capacity in the U.S. would pose significant issues.

The partnership between Intel and the U.S. government, while aimed at boosting domestic chip production, does come with challenges. Some analysts worry about the implications of political involvement in business, questioning how this might influence Intel’s operations and decision-making.

In the ever-evolving tech landscape, maintaining innovation is crucial. As the government and Intel navigate this new relationship, the focus will need to remain on promoting growth while addressing potential pitfalls that can arise from increased intervention.

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