Two economists who have studied Intel warn that Trump’s move to take a stake in the company amounts to flashy optics, incoherent strategy, and a creeping politicization of economic policy.
Intel, once dominant in semiconductors, has flailed amid manufacturing problems, leadership changes, and fierce global competition. And unfortunately, it matters because in a world where chips are the new oil, controlling them means controlling power -- economic, military, and geopolitical.
As the company stumbles through global tech wars and Washington photo ops, two economists deeply familiar with the company suggest that the latest CEO shake-up and Trump’s government share deal may have less to do with industrial policy and more to do with political theater dressed up as strategy. In conversations with the Institute for New Economic Thinking, William Lazonick, a prominent critic of stock buybacks, and his colleague Matt Hopkins express skepticism over what Hopkins describes as Trump’s “shotgun” approach to the economy and his erratic decision-making.
“It’s pretty clear to us that [Pat] Gelsinger was pushed out because he became the face of Biden’s CHIPS Act push,” Lazonick said. “Intel’s big investment and turnaround strategy was supposed to cost $100 billion. Unfortunately, Intel had already wasted $145 billion on stock buybacks over the previous two decades. The $8 or $9 billion from the government was just a fraction of the total investment required, but it was still important.”
The whole point of CHIPS Act funding was to put Intel back in the front lines as a manufacturing leader in advanced chips, the kind that power AI, smartphones, and national security. “The big challenge was catching up with TSMC and Samsung – developing the industrial capabilities necessary for advanced chips, microprocessors for smartphones, AI, that kind of thing,” Lazonick said. “It’s going to be hard no matter what. If Intel doesn’t do that, the U.S. essentially loses domestic capacity in those areas.”
While TSMC and Samsung have built plants on U.S. soil, Lazonick cautioned that “it’s not the same as having a strong American-owned player.” In his view, domestic control matters, particularly when geopolitical risks are involved. “TSMC already took a big geopolitical risk cutting off Huawei in 2020, and that showed how fragile those supply chains are,” he noted. “But here’s the problem: the U.S. government doesn’t really have a structure for aligning corporate and national interests.”
Lazonick observed that Trump’s latest maneuver, snagging a 10% government stake in Intel using already-allocated CHIPS Act funds, looks more like a headline grab than a power move, noting that “while the government has 10% of the shares, there’s no taxpayer representative on the board – and frankly, who would want one put there by Trump?” Meanwhile, he noted, “hedge fund activists, for instance, can buy 1–2% of shares, and they can line up institutional investors, pressure companies into buybacks, and accomplish other items on their agenda.”
In short, “if Trump’s aim was leverage, this isn’t it. It feels more like a symbolic gesture, a PR move. There’s no coherent policy behind it.”
Hopkins added that “if we want to save American semiconductor manufacturing, the shareholding doesn't necessarily have anything to do with that.”
And it could be worse than useless. “If I were an Intel shareholder, I’d be pissed,” Lazonick said. “Suddenly there are 10% more shares in circulation, which dilutes your stake. Yes, the stock price went up, but that’s just speculative. Fundamentally, shareholders are now getting less for each share.”
So who benefits? “He [Trump] gets to spin it as a win, like he’s doing something for American industry,” said Lazonick. “But in reality, it’s performative. Shareholders lose. There’s no clear industrial strategy. And it creates more uncertainty for Intel’s leadership.”
That lack of strategy, Lazonick argued, is the real issue. “In theory, there could be [an upside] if this were part of a broader plan — if the government said, ‘We’re going to help Intel succeed, invest more if needed, and take a stake to give taxpayers upside’ — that could be viable. But there’s no consistency. No policy. Just Trump winging it.”
Hopkins also expressed concern that the government’s shareholding, while framed as a national security investment, lacks a clear strategy or accountability: taxpayers could profit if Intel rebounds, but they could also lose big if shares are dumped at a loss or the company goes bankrupt. He draws a cautionary parallel to Tesla’s 2010 DOE loan, which helped avert bankruptcy and bring the Model S to market. When Tesla repaid the loan early in 2013, the government’s warrants to buy Tesla shares were cancelled. The option to get shares of Tesla, had it been exercised, could have yielded taxpayers hundreds of millions, or today, tens of billions. Hopkins warned that Intel’s deal offers no clear upside for taxpayers—and worse, a similar option to purchase more Intel shares included in the deal is contingent on Intel giving up majority control of its foundry, arguably undermining the very intent of the CHIPS Act.
Hopkins cited the 2009 General Motors bailout as a cautionary tale: “The government stepped in, provided a bailout, and took an equity stake in GM. But once the company began to recover, Wall Street -- the same voices that had mocked GM as ‘Government Motors’ -- urged the government to sell its shares. And they did, at a loss. Taxpayers ended up losing $11 billion. At the very least, we could have held onto the shares until we broke even.”
If anything, the latest Intel move signals déjà vu: “There’s no policy that says, ‘Here’s how we build capacity, retain talent, and ensure national competitiveness,’” Lazonick said. “It’s all short-term politics.”
The deeper risk is that short-term politics dictate Intel’s future. “The risk is that Trump’s involvement introduces chaos,” Lazonick said. “Gelsinger was building trust with government, emphasizing the national security role. Now, Intel’s in limbo — the board’s reacting to politics, not strategy.”
He noted that despite purchasing the most advanced EUV machines from ASML, Intel still faces a long road ahead. “It takes years to ramp up, train staff, and reduce defects. It’s not plug-and-play,” he said. “And if they don’t invest aggressively now, they fall even further behind.”
So does Trump’s move help? “Almost certainly not”, Lazonick said. “If you’re making investment decisions based on what pleases Trump rather than what’s good for long-term competitiveness, you’re heading in the wrong direction.”
Hopkins added that “with Trump pushing chaotic tariff policies and demanding Lisa Cook’s removal from the Fed, we’re seeing a politicization of economic policy that could further destabilize already fragile efforts to rebuild U.S. chipmaking.”