{"id":1571110,"date":"2025-09-11T02:30:00","date_gmt":"2025-09-11T06:30:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/how-us-government-stake-in-intel-will-affect-tech-race-with-china\/1571110\/"},"modified":"2025-09-11T02:30:00","modified_gmt":"2025-09-11T06:30:00","slug":"how-us-government-stake-in-intel-will-affect-tech-race-with-china","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/how-us-government-stake-in-intel-will-affect-tech-race-with-china\/1571110\/","title":{"rendered":"How US Government Stake In Intel Will Affect Tech Race With China"},"content":{"rendered":"

How US Government Stake In Intel Will Affect Tech Race With China<\/span><\/p>\n

\n

Authored by Terri Wu via The Epoch Times<\/a> (emphasis ours),<\/em><\/p>\n

The federal government\u2019s move to take<\/a> a 10 percent stake\u2014and become the largest shareholder\u2014in chip company Intel in August raised some eyebrows among investors and observers.<\/strong> California-based Intel, once the leading manufacturer of microchips, has for years struggled to keep up with its competitors in an industry critical to ensuring the United States\u2019 continued technological and military dominance.<\/p>\n

The Intel logo is displayed outside of the company’s headquarters in Santa Clara, Calif., on July 26, 2025. Gary Wang\/The Epoch Times<\/em><\/a><\/p>\n

While the government\u2019s ownership is passive, or nonvoting, it will still have some influence over the company.<\/strong><\/p>\n

Some have suggested that the deal amounts to government meddling in the private sector or even signals that the nation is moving away from a free market and toward state capitalism.<\/p>\n

Trump administration officials have pushed back on characterizations likening the move to socialism, saying the agreement will boost U.S. leadership in semiconductors.<\/strong><\/p>\n

The deal forms part of a broader trend as Washington steps up its efforts to win the U.S.\u2013China tech race, experts told The Epoch Times.<\/p>\n

While they were split on how to characterize the trend\u2014state capitalism or something else\u2014the experts agreed it was a necessary move to compete against an economy directed by a regime that doesn\u2019t play by established trade rules.<\/p>\n

Washington cannot win the tech race by just controlling Beijing\u2019s access to advanced U.S. technology, the experts said. It also needs to exert pressure on China\u2019s economic model.<\/p>\n

For years, the Chinese regime has been flooding the global market with inexpensive products by maintaining an excessive manufacturing capacity. That, in turn, makes money for tech development.<\/p>\n

As China continues to rely on stolen technology and funding through exports, the United States has a short window of opportunity to gain a step ahead in the tech race, experts said.<\/strong><\/p>\n

Intel\u2019s Strategic Value<\/h2>\n

Under the deal, the Department of Commerce converts the $11.1 billion grant it provided to Intel under the 2022 CHIPS and Science Act into nonvoting shares. Additionally, within five years, the U.S. government has the right to acquire another 5 percent share if the company decides to reduce its ownership stake in its chip manufacturing, or foundry, business to below 51 percent. That\u2019s the \u201cfoundry clause.\u201d<\/p>\n

The federal government has taken ownership of private companies before. However, that was typically done during an emergency, such as the 2008 financial crisis or the COVID-19 pandemic.<\/p>\n

Intel\u2019s current woes are not due to broader market conditions but poor management decisions.<\/strong><\/p>\n

Intel CEO Pat Gelsinger holds the \u201cGaudi 3\u201d AI chip as he speaks at the 54th Annual Meeting of The Semafor 2024 World Economy Summit in Washington on April 17, 2024. Mandel Ngan\/AFP via Getty Images<\/em><\/a><\/p>\n

Intel missed out on the mobile chip market by banking on chips for personal computers, and it was late in the game for advanced artificial intelligence (AI) chips. As a result, the company announced in July that it would slash its workforce by 24,000, or 25 percent of its core employee base, by the end of this year and it recorded<\/a> a $2 billion restructuring charge, leading to a $3 billion loss in the second quarter.<\/p>\n

James Lewis, a former diplomat specializing in technology and a distinguished fellow at the Center for European Policy Analysis, calls Washington\u2019s new approach \u201cstate capitalism.\u201d<\/p>\n

Intel doesn\u2019t get new money, he told The Epoch Times, and taking a stake in Intel without a board seat doesn\u2019t really help solve the company\u2019s problems.<\/p>\n

William Lee, chief economist at the Milken Institute, however, said he thinks it\u2019s too early to conclude it\u2019s state capitalism because Intel is a unique case, and the government\u2019s ownership is passive.<\/p>\n

Lee describes the approach as a \u201cnational defense strategy that includes economic assets.\u201d<\/strong><\/p>\n

\u201cChina\u2019s attack on the U.S. is most likely going to be cyber, software-related, and tech-related,\u201d Lee, who also leads the consultancy Global Economic Advisors, told The Epoch Times. \u201cThat\u2019s why we want to have our own tech industry. Because that\u2019s where the battleground is going to be.\u201d<\/p>\n

Treasury Secretary Scott Bessent, in an Aug. 27 interview on Fox Business, said<\/a> that the fact that the vast majority of the world\u2019s advanced chips are manufactured in Taiwan posed a \u201cnational risk like we haven\u2019t seen since the Arab oil embargo.\u201d The 1973 crisis caused severe energy shortages in the United States and triggered a global recession.<\/p>\n

From a national security perspective, Intel has unique value because it\u2019s the only American shop with advanced chip design and manufacturing under one roof.<\/p>\n

The chip supply chain consists of three main components: design, wafer production, and testing and packaging. Unlike Nvidia and AMD, which rely heavily on Taiwan for chip production, Intel owns<\/a> all the steps and maintains facilities in the United States. It also has testing and assembly sites in China, Malaysia, and Vietnam.<\/p>\n

Washington\u2019s move is \u201cpreemptive\u201d in using state capital to prevent the talent and technology of a high-tech company from being transferred to other countries, Ethan Tu, founder of Taipei-based Taiwan AI Labs and a veteran practitioner in the AI field, told The Epoch Times.<\/p>\n

Read the rest\u00a0here…<\/strong><\/a><\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 09\/10\/2025 – 22:30<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/how-us-government-stake-intel-will-affect-tech-race-china<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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