Increased Involvement of the U.S. Government in Corporate Affairs
The U.S. Department of Commerce has taken a significant step in supporting the struggling semiconductor company Intel, acquiring a 10% stake last week. This move, aimed at bolstering the U.S. semiconductor industry, converts approximately $10.9 billion in federal subsidies under the "CHIPS and Science Act" into Intel shares, making the U.S. government the largest shareholder.
The move marks another instance of the U.S. government's intervention in a domestic company. In a separate development, the Defense Ministry has entered into partnership with MP Materials, a U.S. company specializing in rare earths and magnet production. MP Materials operates a rare earths mine and plans to build a second plant for the production of magnets, with Pentagon support.
This involvement in MP Materials signifies the U.S. government's foray into the rare earths and magnet production sector. The Pentagon has provided support to MP Materials in its plans to build a second plant for the production of magnets.
President Donald Trump has been vocal about demanding counter-performance from more companies for measures by the U.S. government. Trump originally demanded 20% from chipmakers for export licenses. Currently, chipmakers Intel and AMD pay 15% of their semiconductor sales to the U.S. government.
Trump's stance is reflected in the Intel deal, as the company had already received $2 billion in subsidies before the stake purchase. The Commerce Department, which will hold the stake, must follow Intel's suggestions in shareholder votes.
Moreover, the U.S. government, under Trump, has exercised control over a steel company, US Steel, through a "golden share." This special power grants the U.S. government the authority to approve relocations, plant closures, or large takeovers within the U.S.
Trump also wants the Intel deal not to be an isolated case. He wants to demand similar counter-performance from more companies for measures by the U.S. government. Trump's vision is to ensure that the U.S. government benefits from its support to domestic companies, a stance that has been reflected in the recent moves by the U.S. government.
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