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White House in Talks with Intel for 10% U.S. Government Stake

90 points| sugarpimpdorsey | 7 months ago |wsj.com | reply

146 comments

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[+] SimianSci|7 months ago|reply
Im confused over the state of ideology within the republican party at this point. For years, government ownership and oversight has been demonized as the very thing that leads to inefficiencies and bad business practices. Now the same party has their figurehead looking to take partial government ownership of a business?

Can someone explain this ideological whiplash?

[+] kelnos|7 months ago|reply
Because it's never been about ideals. It's about power and financial/economic dominance. Politicians will align themselves with whatever ideology will get them the support they need to accumulate power and money. Whenever they take actions that seem to violate that ideology, they'll use spin and propaganda to justify it so as not to anger their base.
[+] kenjackson|7 months ago|reply
" For years, government ownership and oversight has been demonized as the very thing that leads to inefficiencies and bad business practices. "

This was their position just a few months back. This was the reason DOGE existed. At least that's what they said.

But it was never about that. It was always about the fact that they felt that they didn't have control of the government so they didn't want it dictating terms to them. Now that they have control and believe they always will -- now they believe that government should control everything.

[+] lawik|7 months ago|reply
I think Intel wants to stay alive so they are looking for a lifeline and the current administration wants to bring chip production into the US.

Intel's death would be very embarassing to that whole effort. So Intel has incentives (survival) and the administration has incentives (jobs in the US). The method is "whatever can be claimed as a win".

No US party seems particularly capable or keen to hold an ideological line but especially not the GOP from what I've seen. Not saying other countries have particularly impressive parties either. I'm less than thrilled with ours over here.

[+] UncleOxidant|7 months ago|reply
They used to be against tariffs and for free trade as well.

The Republican Party circa 2012 no longer exists. The hood ornament looks the same, but the car is completely different.

[+] ggoo|7 months ago|reply
It's just about winning (read: more power for the upper class), not about ideals.
[+] prepend|7 months ago|reply
To me it feels like the same whiplash around auto bailouts and equity. Different donors and lobbyists so the roles are reversed for parties.

I don’t think there’s ideology in politics any longer. And it’s even hard to predict what industries and firms are in favor.

[+] jryan49|7 months ago|reply
Pretty sure they've jumped the ideological shark a long time ago at this point. Nothing is consistent. They say what's convenient for the situation. There are no ideals. People's attention spans are so short they don't notice, and if they do notice, most don't seem to care. You can find an infinite amount of tweets with these people contradicting themselves over and over again.
[+] orthecreedence|7 months ago|reply
> Can someone explain this ideological whiplash?

Easily. It's called fascism, one of the cornerstones being the marriage of industry and state. It has long been the marching direction of the US power structures, whether the individual participants cop to it or not. It has been an unwritten rule for decades and now it's just becoming more blatant. Republicans are not experiencing whiplash as much as they are becoming self-aware of their actual desires. There is a minority of the republican party that actually values small government (my respect goes out to them), but most of the party's actions to this end have been an obscene minority compared to their constant desire to either regulate morality via government overreach or enshrine their big business butt buddies into monopoly status.

While I feel the democrats are guilty of many of the same things, they are still a faction of what I would call the "capitalist-imperialist party." The GOP has been splitting off into the "fascist-imperialist party" for many years, which is likely one of the reasons for the political divide.

[+] ToDougie|7 months ago|reply
1. The Republican party of 10 years ago is not the Republican party of today. 2. Desperate times call for desperate measures.
[+] bamboozled|7 months ago|reply
I'm the same, they absolutely loathe Zohran Mamdani for talking about state run grocery stores, but getting involved in Intel is fine? What?

The cognitive dissonance is what blows my mind, this applies to almost every topic.

Borders? Well according to them borders are the most important thing ever, border security etc. Yet Ukraine? Well f** their borders, they're just something Putin can play with and that's totally fine according to them?

The ideology seems to be, "Whatever aligns with my or the great leaders world view, is good and I'll tell whatever stories I have to justify it to myself and others.".

[+] linkjuice4all|7 months ago|reply
At some point a new group of organized criminals has either replaced or partnered with the "Republican Party." It seems this is partially for the Trump-aligned group to draw in votes and presumably corrupt or pressure the remaining "good guys" in the various government and political organizations.

Many of these moves and strategies make sense when viewed through the lens of organized crime shaking down companies, governments, private organizations, and such.

As to why they still have supporters - I can't really explain that aside from "they're hurting the right people."

[+] ModernMech|7 months ago|reply
The same guy who tried to overthrow the 2020 election despite claiming to defend the constitution, is now trying to take government control over corporations despite claiming to believe in capitalism. And you're confused as to why this is happening?

> Can someone explain this ideological whiplash?

You've misidentified the ideology. It's "might makes right" not "let's do capitalism".

[+] throw0101c|7 months ago|reply
> Im confused over the state of ideology within the republican party at this point.

The ideology is whatever Trump says.

[+] crazygringo|7 months ago|reply
> Can someone explain this ideological whiplash?

Yes. The party used to be conservative; now it's populist. They are two very different ideological positions. It changed under Trump. It's the same party in name, but a totally different ideology. Many traditional conservatives have gone along with it because the party still slashed taxes, which has been their main goal for a long time. They care much more about lower taxes than government ownership.

[+] fabian2k|7 months ago|reply
There is no consistent ideology. There is only grift, and rage against anyone that they think wronged them.

Okay, there is ideology. But it's a bunch of different people with very different ideologies and goals.

[+] cvwright|7 months ago|reply
It’s the end of the postwar consensus and the return of the “strong gods”.

Before: hands-off economic liberalism.

Now: doing what seems best for ones own nation state.

See “Return of the Strong Gods” by RR Reno for an interesting explanation of lots of puzzling behavior from major political parties.

[+] therealpygon|7 months ago|reply
It’s communism! But we want it..

They literally have no political North Star at this point. It is the whatever Trump says goes for the spineless Republicans and do-nothing Dems.

[+] tick_tock_tick|7 months ago|reply
When Trump says "America First" he means whatever is needed for America to "win". Lots of major tech leaders and people around him think the AI race with China is going to define the next 25-50 years some think this is "the race" as in whoever wins is going to be The Superpower full stop not for the next 50 year just forever.

With that on the line a lot of principles are just plain unimportant.

Hell even Democrats are falling inline behind him on China. D.C. seems to think this is a make or break moment for the long term success of the country.

[+] nxobject|7 months ago|reply
Note that this makes USG the largest stockholder – BlackRock and Vanguard (as institutions, not funds) are about ~9%.
[+] theturtle|7 months ago|reply
Intel does not have to be eternal. There was a time before Intel.
[+] etempleton|7 months ago|reply
What other US company has a shot of making a sub 5 nm chip in the next, oh, let’s say 20 years?

Because of this, unfortunately, Intel is too big too fail.

[+] joshka|7 months ago|reply
I know everything is for sale, but how would Intel buying 10% of the US Government work? ;P
[+] tempodox|7 months ago|reply
So this is the official end of the “free market” then, with stamp and seal.

Welcome tho the People’s Republic of the Soviet States of America.

[+] nabla9|7 months ago|reply
Socializing the means of production.

Heh. State socialism https://en.wikipedia.org/wiki/State_socialism

[+] nabla9|7 months ago|reply
>... advocates state ownership of the means of production. This is intended either as a temporary measure, or as a characteristic of socialism in the transition from the capitalist to the socialist mode of production or to a communist society.
[+] raylad|7 months ago|reply
We need to be doing much, much more of this so that the country has ownership of substantial percentages of the critical infrastructure, including AI. That seems to be one of the only ways that the citizens in general will be able to share in the fruits of the technology, similarly to how Alaskan citizens get payments from petroleum.
[+] runako|7 months ago|reply
Part of the reason we don't want this is because it creates an enormous government spoil, which is the decision to label a given company as part of the critical infrastructure of the country. For example: why Intel and not AMD? Does Micron make the cut? Seagate? What about the companies that make the inputs to the fabs? Telecom companies that run the Internet? Microsoft & Apple because business runs on their software?

This is Too Big To Fail on steroids.

> citizens in general will be able to share in the fruits of the technology, similarly to how Alaskan citizens get payments from petroleum

The alternative approach is right there in your answer. Like in Alaska or Norway, tax the winners and apply the benefits to citizens.

Sadly, we are going the other way both on taxation and benefits. The good news is we can at any time choose to live differently. Some might debate whether we could maintain our competitive business environment if Intel or Nvidia paid a tax rate comparable to yours, but perhaps it's worth a try?

[+] ModernMech|7 months ago|reply
Why can't we just raise taxes on corporations?
[+] TriangleEdge|7 months ago|reply
I don't understand how the finances work here. Is the proposal that the US govt buys 10% of available stocks at some price from Intel to give them cash to operate? Why doesn't Intel just get some investors to do that? If Intel is no longer competitive from an investor standpoint, then what's the point?

A quick ChatGPT search tells me Intel owns none of it's own stock, so I'm confused. It tells me a company can sell newly created stocks and dilute the value of the old stocks. I didn't know this was possible. Is this the proposed case?

[+] kelnos|7 months ago|reply
> It tells me a company can sell newly created stocks and dilute the value of the old stocks. I didn't know this was possible.

Yes, absolutely, and it's a fairly normal process. How do you think VC investment works? Founders take funding in exchange for diluting their ownership. Further investment rounds dilute all shareholders, including big investors from prior rounds. IPOs often involve issuing new shares, further diluting existing investors. Acquisitions can even result in zeroing out some classes of equity.

Existing investors put up with it because either a) they believe their diluted shares will end up being worth more in the long run, because the new investment is critical to growth or success, or because b) they don't have enough voting power to stop it.

Corporate structure and ownership is just a legal fiction. There's no set number of slices that a company is cut into, and contracts, terms, by-laws, etc. can change that at any time.

[+] recursivecaveat|7 months ago|reply
Say you own 100% of a company whose fair value is $100 dollars. I give the company $900 and in exchange it issues me enough new shares that I own 90% of the company. Now you own 10% of a $1,000 company, with exactly the same number of shares as before, and your shares having the same fair value as before. Now this does assume that controlling stake of a company is not really worth anything, which is theoretically true if none of us is doing illegal-if-not-particularly-easy-to-prove screw-over-minority-shareholders type stuff.

Not to say there is never any funny business: with private companies who don't have a market for their stock the 'fair value' is not obvious and you can play games with that number to dilute away the ownership of people who don't have board seats.

[+] DragonStrength|7 months ago|reply
From the subhead

> Money earmarked for semiconductor company under Chips Act could be converted into equity

They’re already getting federal money.

[+] Traubenfuchs|7 months ago|reply
An amount of stocks is created relative to the investment. Share value stays the same. Ownership percentage is diluted.
[+] christkv|7 months ago|reply
They can issue new stock I imagine. I think this is to keep fab capacity of advanced nodes still producing in the us and to ensure the engineering talent is not scattered by a breakup of Intel
[+] bigyabai|7 months ago|reply
It's like loading more men onto a sinking ship. Gee, I wonder how this one ends.
[+] eska|7 months ago|reply
While I’m pessimistic I do hope they turn their ship around. We don’t benefit from having less diversity in that market.
[+] beefnugs|7 months ago|reply
Well, its like giving more money to the guys shoveling the money off the ship as it sinks. They will tip their hat or something as they continue shoveling.
[+] orwin|7 months ago|reply
... To me its a great idea, transitionally, until the shares are ready to be given to workers and ex-workers, but i'll admit that was definitely _not_ on my bingo card. Hopefully this work great and we'll see the US nationalize more instead of just giving money for nothing.