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President Donald Trump announced this week that the federal government will become Intel’s largest shareholder, giving the U.S. government a 10% stake in the embattled U.S. chipmaker. “I’m turning it over to the government of the United States,” Trump said, boasting it was “a deal we just made with Intel that’s never been made before.” Trump said that he converted nearly $9 billion in grants to the company into equity that the U.S. government now owns in the chipmaker.

The move marks a radical break from decades of Republican economic orthodoxy and has prompted outrage from conservatives who usually defend Trump. “I am very, very uncomfortable with that idea,” said Larry Kudlow, Trump’s former top economic adviser, in an interview on Fox Business on Wednesday. Steve Moore, another informal Trump economic adviser, was even blunter: “I hate corporate welfare. That’s privatization in reverse. We want the government to divest of assets, not buy assets. So terrible, one of the bad ideas that’s come out of this White House.”

It’s raised the question: Is this socialism? Socialism, by many definitions used by critics for decades, is government control over the means of production for the good of society. By that definition, critics of Trump argue, this is no different than China or Russia. Trump on Wednesday pushed back against those claims; however, with exuberance, he claimed the government got $10 billion to $11 billion “cash” from the Intel deal. “Why are ‘stupid’ people unhappy with that?” he tweeted.

The Intel Stake

Trump made it clear this was just the first such deal he would make as president, warning Intel’s chief executive officer during a Wednesday event that the company should “act responsibly, which I know you will do, or we’ll make a few more of these transactions.” “I hope I’m going to have many more cases like it,” Trump said. Trump’s approach to picking industries and helping prop them up would have been familiar to economists decades ago as industrial policy, or the use of government as a direct tool to shape and support the structure of the economy.

“This should not be happening in a capitalist society, period,” said Senator Rand Paul, Trump’s ally, who took to X, the former Twitter, to mock the move. “Wouldn’t the government owning part of Intel be a step toward socialism? Terrible idea.” Senator Thom Tillis called it a “semi-state-owned enterprise a la CCCP” in a tweet, referencing the Soviet Union.

Others are more supportive, of course. Bernie Sanders praised the decision on X, for example, saying: “Just for the record: I like the fact that the government is the largest shareholder of Intel. It means that a powerful sector of our economy will be working for the benefit of working people, rather than just enriching the top 1%.”

Trump did try to make clear that the U.S. government, as Intel’s largest shareholder, wouldn’t exert control: The government will be a non-voting shareholder, Trump said Wednesday. In a required SEC filing ahead of Trump’s announcement, Intel said the deal could “limit our ability to obtain grants and other funding from the U.S. government” and hurt global sales. It could also mean “greater government oversight of our business or further action by the U.S. government, such as export controls or other sanctions against us.”

Intel’s moves in early Wednesday trading suggest it also shares some of these concerns: The stock price shot up after Trump’s announcement on Wednesday, but it’s down nearly 50% year to date. Intel is also dealing with its own problems: Earlier this year, the company said it would slash its workforce by 15%. Intel has a market valuation of roughly $110 billion.

Political Ramifications and Responses

Trump is moving to exercise his power to direct the federal government in ways it has not before, leaving conservatives wondering whether they will have to weigh in on an issue they have largely avoided in the past. Senator Marco Rubio, one of Trump’s closest allies, declined to comment on the Intel move when reached by The Dispatch.

Commerce Secretary Howard Lutnick did have a comment. “That is not socialism,” Lutnick, CEO of an online brokerage firm, said on Fox News this week. “That’s the best businessman in the United States of America in the Oval Office doing fair things for us.” The Commerce Secretary is a role traditionally tasked with encouraging and guiding economic development. That was long done through trade policy. But Trump is effectively using Commerce — and the whole federal government — to buy a role for itself in Intel, critics say.

The Wall Street Journal reported on Tuesday that Trump initially demanded the resignation of Intel CEO Lip-Bu Tan after becoming angry about the CEO’s past business links to China. Tan met Trump in the Oval Office on Tuesday and was allowed to stay on as CEO after Trump changed his mind about the Intel investment.

Trump’s Own Approach

Intel has taken money from the U.S. government before, and Tan previously said during the trip to the White House that the Biden administration’s bipartisan Chips Act was a “game changer” for the company, which pledged to invest $20 billion in new U.S. chip factories, including Intel foundry operations.

Trump claimed to have extracted an additional $11 billion in value for U.S. taxpayers with the deal. “We got $11 billion from Intel,” he told reporters Wednesday. “We have no choice. We have to do it.” Trump insisted, however, that the government will have “no interference” in Intel’s business operations. When the president of the United States becomes the largest shareholder of a private company, some might suggest, it’s not quite so clear-cut.