r/hardware • u/Dakhil • 7d ago
News CNBC: "Lutnick says Intel has to give government equity in return for CHIPS Act funds"
https://www.cnbc.com/2025/08/19/lutnick-intel-stock-chips-trump.html144
u/Salkinator 7d ago
Oh ok so it’s a shakedown
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u/AcademicF 7d ago edited 7d ago
Sounds like communism to me. Which I thought the Republicans were against.
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u/vegathelich 7d ago
Republicans are only against communism if it benefits the common man. If it benefits corporations it's preferable.
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u/teutorix_aleria 7d ago
I really hope this is tongue in cheek because that's clearly not communism.
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u/I_Hate_Humidity 7d ago
Pretty much what the administration has tried to do with Harvard, Columbia, and UCLA; demanding hundreds of millions of dollars as a settlement in order for the universities to remain eligible for federal funding.
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u/Historical_Bread3423 7d ago
The problem is Intel's BOD sucks donkey balls. You have the worst people running a company that has been deemed essential to the national interest.
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u/ItsMeSlinky 7d ago
Government ownership of a private company?
I dunno that doesn’t sound very “free market” from the “keep government out of business” crowd.
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u/SubRyan 7d ago
Could just turn it into one of the numerous US government corporations
https://en.wikipedia.org/wiki/State-owned_enterprises_of_the_United_States
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u/kwirky88 5d ago
It would play out like what happened to the auto manufacturing assets of the us after 2008 QE.
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u/scheppend 7d ago edited 7d ago
It depends. If a company needs gov support it's normal to get equity in exchange.
The dutch did that with one of their banks that were about to fall. And then they sold it back to the market (with profit) once the bank bounced back
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u/AquafreshBandit 7d ago
The issue is after the 08 financial crisis, the GOP was on a tear about government investments in private firms and what a terrible, awful, wrong idea it was.
It turns out they were lying. Their issue was it wasn’t them in charge.
The Feds turned a profit on their GM shares and a green energy fund where one company didn’t do well (Solyndra) but everyone else excelled. It didn’t matter.
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u/79215185-1feb-44c6 7d ago
everyone else excelled
Worked at one of the companies that received the same funds as Solyndra. Company no longer exists. Not all of the companies that received the DoE funding succeeded. You only know about Solyndra because its failure was widely advertised.
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u/Strazdas1 2d ago
While technically this is true, as long as the general average is profitable its still money well spent.
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7d ago
It turns out they were lying. Their issue was it wasn’t them in charge.
the country club frat boy GOP of the 2000s got replaced by true believers and fascists
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7d ago edited 7d ago
If a company needs gov support it's normal to get equity in exchange.
if you suggested this in /r/hardware back in 2022-23 when they were euphoric about CHIPS act corporate welfare they would have massively downvoted you
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u/ItsMeSlinky 7d ago
I’m calling out the hypocrisy.
I actually support GOV support for key industries. But the GOP SCREAMS about overregulation and GOV in business being bad all the time, and then this admin goes around and hold Congressionally approved funding for ransom.
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u/SortOfWanted 7d ago
That was a nationalisation to prevent a bankruptcy that would trigger wider fallout in the Dutch/European financial sector. The government is still selling off shares in ABN, at a significant loss. The situation is completely different from Intel.
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u/TenderfootGungi 6d ago
Other countries do it, yes, but they are openly socialist. Which is ironic coming from the "free market" republicans.
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u/radix2 7d ago
I can fully get onboard with Nationalised infrastructure such as roads, power stations, power transmission, water supply and communications etc. After that it becomes a little more grey. Is it a national security related company. Then maybe it should be majority owned at most, but not in all cases.
I imagine my opinion would be pretty unpopular in the US...
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u/teutorix_aleria 7d ago
Anything important for the advancement of civilization is fair game. Especially when its not financially viable to operate as an independent enterprise. Private companies would never have got us to space without the US and USSR pouring billions into R&D.
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u/Strazdas1 2d ago
Infrastructure is more than that nowadays. Internet is something so important now that you cannot for example get a job without access. It should be treated like utility.
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u/iamtheweaseltoo 7d ago
If the government is giving taxpayer money to that private company, they absolutely get have ownership of said company.
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u/068152 7d ago
Oh so Ford and the other major carmakers are wholly owned by the US government since the 2009 financial collapse?
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u/No_Sheepherder_1855 7d ago
That bailout did actually include equity in those companies that was later sold off.
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u/tooltalk01 7d ago edited 7d ago
Ford never asked for bailout or owned by the US gov't -- they were however asked to take DOE ATVM loans which was fully repaid in 2022.
Obama made sure that everyone had equal access to the subsidies -- ie, a level playing field -- and received something to avoid potential problems with the WTO.
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u/djm07231 7d ago
That is wrong because Ford didn’t get bailed out during the 2008 financial crisis.
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u/NormanQuacks345 7d ago
Is that true across the board though?
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u/iamtheweaseltoo 7d ago
I don't know if it is, but it applies in this case. Why wouldn't the government get a say un intel if they're giving them taxpayer money?
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u/Swaggerlilyjohnson 7d ago
I don't think this is neccessarily something that should always be True. It's more reasonable in a bailout scenario but Ultimately we originally planned on subsidies to make Semi manufacturing in the US more attractive.
If we require them to provide us equity that is not an incentive it is simply us purchasing shares/investing in them. They still have no real incentive to put manufacturing in the US unless we buy so many shares that we can force them to (Effectively nationalizing them).
I guess it can be debated whether we should nationalize them or not but that would require a much larger and riskier investment then giving them a few billion for fabs. It's not necessarily a better/fairer thing for the taxpayer or really anyone involved.
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u/W0LFSTEN 7d ago
It’s not a private company. And at this point, INTC is closer to being a charitable trust for semicap than an actual business.
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u/m_sobol 7d ago
Intel would actually welcome the federal government taking equity. That would bind it tightly into procurement, preferential treatment, and provide a big financial backstop. It would make Intel too big to fail, and thus the company would be rescued as it falls further behind. The board and executive team would be absolved of their failures. Rival firms would be reluctant to acquire then dismantle Intel for parts, since the feds want to keep domestic semiconductor production alive
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u/Flynny123 7d ago
I actually think the US Gov investing billions in return for an ownership stake is good. Intel failing takes us to a single chipmaking monopoly in one of the most insecure regions in the world. The US Gov will never let Intel fail - might as well make it explicit and easier, instead of writing complex legislation to maybe maybe funnel money their way.
But, if they want to do this, this should be fresh cash. CHIPS act terms were clear.
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u/Exist50 7d ago
I think the question is whether money actually helps.
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u/blueredscreen 7d ago
I think the question is whether money actually helps.
By conservative estimates I'd they need about $50-60B to get 18A into volume across multiple fabs. Between the government and SoftBank, this increases the appetite for both public and private capital as it shows that there are significant backers willing to stand behind the company even in these tough times. Whether that translates to them actually getting the rest of the money is debatable, but at least now it's something we could think about whereas previously it was out of the question.
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u/Exist50 7d ago
18A's path is already set. It's what comes after that's in question. And money to build fabs is meaningless if they don't have a node customers want to pay for. That's how they got into this mess to begin with. If they had more customers than they could supply, getting loans would be easy.
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u/blueredscreen 7d ago
18A's path is already set. It's what comes after that's in question. And money to build fabs is meaningless if they don't have a node customers want to pay for. That's how they got into this mess to begin with. If they had more customers than they could supply, getting loans would be easy.
I don't think that it's necessarily set in this particular fashion anyway. They are going to be massively bottlenecked by production in a single fab, and even that too assumes that they can get to productive yields. To have 18A on a multinational basis is at the very least ~$50B, with their only customer being themselves. Then, even if their designs are flawless, superb in fact, that still won't cover the R&D expenses for 14A. What they need is essentially free money. Maybe if they "donate" to a private dinner, they'll get some.
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u/Exist50 7d ago
They are going to be massively bottlenecked by production in a single fab
18A clearly is not production limited, or they would not be canceling basically every plan to expand production.
Then, even if their designs are flawless, superb in fact, that still won't cover the R&D expenses for 14A
Intel used to claim that a successful 18A would basically be enough to make the fabs break even through Intel's business alone.
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u/blueredscreen 7d ago
18A clearly is not production limited, or they would not be canceling basically every plan to expand production.
What I'm saying is that in an ideal scenario, they would have simultaneous production in multiple worldwide locations to enable increased scale and redundancy. If they can only stand up a singular fab for now, that means almost everything for both client and server has to pass through it, meaning that some compromises almost certainly have to be made.
Intel used to claim that a successful 18A would basically be enough to make the fabs break even through Intel's business alone.
I am for now quite skeptical on the truth of that claim.
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u/ibeerianhamhock 5d ago
How does that work when there are other companies in the US producing chip designs and products though? The gov could selectively screw over AMD/nvidia/etc to give intel a leg up because they have a financial interest. This feels unethical to me.
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u/Flynny123 5d ago
Do any of those companies operate leading edge fabs? I agree it would be cleaner if the foundry were spun off and invested in, to avoid disadvantaging other chipmakers. But ultimately, it’s in AMD’s interest that there is more than one leading edge foundry in the world for them to shop around (we’re not counting Samsung)
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u/ibeerianhamhock 5d ago
That's a very fair point. I almost wish intel would split into a foundry and design company and the gov would invest in the foundry.
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u/IamGeoMan 7d ago
So the party for small government.... Checks notes.... Wants government to own a slice of production. 🤡
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u/OverlyOptimisticNerd 7d ago
The same party that railed against Obama’s administration taking a TEMPORARY stake in GM until TARP was repaid.
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u/upbeatchief 7d ago edited 7d ago
US tech dominance officlly ended. No way US companies can compete with chinese firms that are fully backed by the government while Americans shake down their own for loose change.
If the EU is willing. I am sure rhey can poach a few top talent and start a new venture to secure their own tech sector.
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u/imaginary_num6er 7d ago
Also Intel will probably be banned from China if the argument is Huawei is too tied to the Chinese government for sales in the U.S.
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u/W0LFSTEN 7d ago
You can’t be talking about US tech dominance ending, and then proceed to talk about the EU being a winner here. Which century is this projection expected to be realized?
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u/bob- 7d ago
Where did he say EU is a winner? Maybe try reading before making daft comments
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u/i7-4790Que 7d ago
Is your reading comprehension that bad?
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u/W0LFSTEN 7d ago
Unsure, especially seeing how you haven’t actually noted anything that would make me think as much. Give it a shot though, and be specific!
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u/Cybor_wak 7d ago
Also most engineers are progressive.. goodbye good engineers
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u/Rude_Thought_9988 7d ago
Idk what engineers you hang out with, but that’s not anywhere close to being the case 🤣.
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u/Strazdas1 2d ago
It is by no means a representative sample, but every engineer i know wouldnt want to be called progressive.
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u/glizzytwister 7d ago
China still has a long way to go before they're even remotely close to competing with US chips, from even a decade ago. They're working on it, and will likely get there, but they're not producing X86 CPUs any time soon, same with modern GPUs.
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u/upbeatchief 7d ago edited 7d ago
No, it had a long way before the US kneecapped it self.
China was 10 years from catching up while the US firms were also advancing. Now that intel has seemingly taken face planting daily as a business plan. The timeline might have moved up.
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u/Strazdas1 2d ago
China did not get any closer by US stopping. It just meant they will be closing the gap sooner.
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u/glizzytwister 7d ago
No, China has 10 years before they get remotely close to modern Intel/AMD. Even if intel went bankrupt tomorrow, China won't be any further ahead. Are they even working on anything that isn't a low power ARM chip?
They're way behind.
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u/upbeatchief 7d ago
1-Amd is tsmc, this is about local cutting edge chipmaking. Intel is staggering hard and the US shaking them down is not helping.
2- if you are willing to make huge chips with low yeilds. 700mm at 20%. You can make incredibly powerful chips. China is at the stage were they care more at hitting performance levels than economical scale optimization. They need something local in case they get cutoff in a war for example.
3-Everyone and their mother is saying that china is flooding the market with cash for research and subsidies they will get there at this rate.
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u/Exciting-Ad-5705 7d ago
Nvidia? AMD? Microsoft? Apple? Meta? Google?
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u/upbeatchief 7d ago
Tsmc،Tsmc،Tsmc،Tsmc،Tsmc and Tsmc.
No cutting edge US chipmaker in sight.
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u/Exciting-Ad-5705 7d ago
Taiwan is pretty friendly with the US. As long as the US continues to guarantee its security it will lead in tech
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u/upbeatchief 7d ago edited 7d ago
Fair point.
I fear however With the global poltical view turning to isolationism, the question is how long will the guarantee last. Ukrainian got a definitive promise of protection in the 1990s in return for surrendering nukes. And there are no boots in the ground or even jets to secure Ukrainian airspace. what kind of message the EU and US are sending to china? It's not frightening enough to say the least.
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u/Recktion 7d ago edited 7d ago
The entire US tech sector isn't dependent on Ukraine like it is Taiwan. I think trillions of dollars is plenty of security for Taiwan. Last 60 years have shown the US will do anything to protect its financial interest.
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u/knghtwhosaysni 7d ago
I don't know why this isn't the norm when the govt hands out billions to corporations
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u/LuringTJHooker 7d ago
Agreed, if it’s too big to fail and the public is needed in order to bail it out, then the government should be given part ownership and a vested interest until the company can pay them back in full. If you need to socialize the losses then you can no longer privatize the profits.
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u/PunjabiPlaya 7d ago
Republicans hate big government, socialism, and communism, right? Right?
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u/F9-0021 7d ago
The Republicans that actually believed in that stuff were either brainwashed and joined the cult or left and became libertarians. The Republican party is fascist, and that's not an exaggeration. The Fascisti did stuff like this.
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u/CommanderArcher 7d ago
Despite the bullet hitting my ear, I can still hear the voice of the party. /s
It would be a fine move if this wasn't against what the right has been screeching about for years.
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u/airinato 7d ago
Why the fuck didn't Intel pay for the 100,000 bribe, sorry 'private dinner', that every other company paid?
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u/Goddamn7788 7d ago
Wake up, Redditors. The only solution for Intel is to rely on the government. Their only real advantage is being an American company. If it were purely a market-driven race, TSMC would eventually displace Intel from the foundry business.
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u/Helpdesk_Guy 7d ago
If it were purely a market-driven race, TSMC would eventually displace Intel from the foundry business.
They already have actually, that's why everyone wants to fab at TSMC instead of Intel.
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u/Silver-Promise3486 7d ago
I don’t know why people see this as a terrible idea. If the taxpayer is paying for Intel, it’s only fair that they get a share of the profits.
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u/WarEagleGo 7d ago
What would be the term for this action?
- shakedown
- protection money
- graft
- stealing
- theft
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u/JonWood007 7d ago
Kinda ironic the republicans are suddenly in favor of literal socialism here (as in, state ownership of the means of production).
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u/advester 7d ago
Isn't it great how the President just gets to do whatever they want, no matter what the CHIPS Act actually said?
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u/ibeerianhamhock 5d ago
There's a huge conflict of interest in the government owning part of intel and I don't understand how anyone can't see this.
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u/dev_vvvvv 7d ago
That makes sense, actually.
I'm sure it will be followed by the same thing happening with all other companies the US gives bailouts/subsidies to.
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u/PurpleCrayonDreams 7d ago
love the intimidation and bullying. isn't that breaking the law?
now i know the orange insurrectionist doesn't care about breaking laws.
but my god...when will we escape this monster?
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u/Astigi 7d ago
Government extorting and getting their bribes from Intel.
Intel is doomed
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u/ResponsibleJudge3172 7d ago
It's chip act money. Government subsidies. Does that count as bribery and extortion to withhold public funds unless given equity or property like banks do?
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u/Helpdesk_Guy 7d ago
Good lord! Extortion … Are you mental? Where's extortion here?! Intel is doomed due to their corrupt management.
The only one who basically tried to extort money by posing as a 'save-worthy American icon of yesteryear' and scam the government off free tax-payers' money here, is Intel. — It largely backfired, since the USG (while being initially wooed and pay out installments), eventually RIGHTFULLY refused further payouts and even reduced their subsidies.
The EU wasn't even having it, called their bluff, showed Intel the door and told them to go kick rocks. End of story.
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u/yabn5 7d ago
So Intel’s rivals got free money, but Intel does not. As always absolute genius levels of national self sabotage.