What might partial ownership by the Feds mean?
The U.S. government is taking a 10% ownership stake in semiconductor maker Intel, in a move that potentially gives the federal government significant influence over a major U.S. business.
The development isn’t unprecedented, of course. During the global financial crisis of 2008-2009, the U.S. government took temporary stakes in several financial services companies and automakers to prevent those businesses from going bankrupt. As shown in the chart, the government has had brief financial interests in a handful of companies dating back to the 1980s.
Government Intervention in Publicly-Traded Companies
In this case, while Intel might have some struggles, the economy is not. The government’s financial support appears partly driven by national security concerns: much of the domestic chip supply fueling the artificial intelligence boom is manufactured in Taiwan—a nation close to China with a historically fragile and often tense relationship. In a related effort to limit China’s access to these chips, the current administration has reached agreements with U.S.-based chipmakers Nvidia and Advanced Micro Devices to share a portion of their AI-chip sales revenues with the federal government and China.
Going forward, we will monitor these developments (and potentially others if they occur) closely to determine the most likely outcomes to these companies’ future results—and the prospects for their shares.