CHIPS Act equity stake under fire

A government equity stake in Intel under the CHIPS Act prompts a political clash over subsidies and control.

Lutnick Calls CHIPS Act Gift to Rich Companies

On CNBC this week, Commerce Secretary Howard Lutnick criticized the idea of taking a 10 percent stake in Intel as part of CHIPS Act funding. He said the approach is worse than earlier incentives and argued the program has already steered money to companies like TSMC and Intel without clear U.S. governance. The CHIPS Act, enacted in 2022 with 39 billion dollars in subsidies, aims to boost domestic chip making to compete with China. TSMC received 6.6 billion and Intel about 7.9 billion; Intel has announced a major workforce reduction and slower expansion, delaying receipt of much of the funds. The Times notes that converting 10.86 billion in grants into equity would be among the largest interventions since the 2008 financial crisis. Lutnick argues the administration should demand an equity stake, while critics warn of governance risks and market distortions.

The clash reveals a shift in how policymakers think about subsidies. The idea of converting grants into equity reframes aid as a form of state investment, not a mere giveaway. That changes risk, governance, and accountability for taxpayers. The debate is part of a broader contest over how the government supports private industry. A stake in Intel would tie taxpayer money to a single company and raise questions about governance and future subsidies. Legal challenges are likely; investors are watching and markets respond to policy signals. The rhetoric around national policy for tech giants will increase political energy around subsidies and chip supply.

The bigger trend is a political pivot toward conditional support for industry ties, not blanket payments. If policy leans toward equity, the line between public policy and private strategy grows blurrier, and the fate of taxpayers hinges on corporate performance and political winds. The outcome may hinge on legal clarity, congressional appetite, and public tolerance for state involvement in private boardrooms.

Highlights

Policy choices will test how taxpayers balance aid with accountability