Palantir Co-Founder Joe Lonsdale Says 'Very Weird' That Trump White House Took 10% Intel Stake, Calls It 'Cronyism In Some Form'
News Summary
Palantir Technologies Inc. co-founder Joe Lonsdale expressed discomfort with the Trump administration's acquisition of roughly a 10% equity stake in Intel Corp., funded by CHIPS Act grants and the Secure Enclave program. Lonsdale labeled the move as "very weird" and a "form of cronyism," questioning the precedent of direct government ownership in a private company outside of an emergency context, despite supporting public investment that clearly advances national security. White House National Economic Council Director Kevin Hassett likened the approach to a sovereign wealth strategy, indicating potential expansion to other industries. The move drew widespread criticism from figures like Senator Rand Paul, economist Peter Schiff, and investor Kevin O'Leary, who called it a "big mistake" and a market distortion. Conversely, Senator Bernie Sanders supported the framework, arguing taxpayers should receive a return on corporate welfare.
Background
The U.S. CHIPS and Science Act, signed into law in 2022, aims to boost domestic semiconductor manufacturing and research through billions in subsidies and tax credits, enhancing national economic and security interests. Its original intent was to address global chip shortages and geopolitical competition. This 2025 action by the Trump administration, converting previously awarded but unpaid CHIPS Act funds into an equity stake, signals a novel and more interventionist approach to industrial policy. It diverges from historical government equity interventions, such as the 2008 TARP program, which were largely seen as emergency measures. This model could represent a significant shift in U.S. industrial policy.
In-Depth AI Insights
What are the long-term implications of the Trump administration taking an Intel equity stake for the U.S. capitalist model? - This move blurs the lines between government and private enterprise, potentially signaling a shift towards a form of "state capitalism" where the government acts not just as a regulator or funder, but as a direct equity owner. - It could alter market dynamics, introduce political considerations into corporate decision-making, and potentially lead to resource misallocation by prioritizing national strategic goals over pure market efficiency. - Once established, such a precedent might encourage other strategic sectors to seek government equity investment, exacerbating concerns about "cronyism" and unfair competition. How might this equity stake model impact private investment prospects in strategic sectors? - Positive Implications: Direct government investment could be seen as an endorsement of specific industries or companies, potentially de-risking them for private investors and encouraging more capital inflow. - Negative Implications: In the long run, the government's presence as a shareholder might stifle private capital vitality. Investors could fear government interference in corporate governance, impacting profitability, or face uncertainty regarding the government's exit strategy during periods of corporate distress. - This model could also lead to overinvestment in certain government-favored sectors or companies, crowding out equally valuable industries. What are the potential geopolitical ramifications of the U.S. government directly holding equity in a key chipmaker? - Intensified Global Industrial Competition: This action clearly signals a U.S. commitment to securing and controlling critical technology supply chains via state power, particularly in the context of technological rivalry with China. This could prompt other nations to adopt similar "national champion" strategies. - Complication of Alliances: While intended to strengthen supply chain security, direct government ownership might raise questions among allies regarding market fairness and trade principles, especially given intense global competition in the semiconductor market. - Escalation of Tech Nationalism: Such a strategy could further fuel the trend of technological nationalism globally, leading to increased trade barriers and reduced technology sharing, thereby negatively impacting global tech innovation and efficiency.