MICHEL MARTIN, HOST:
The Trump administration wants to own a piece of the chipmaker Intel. U.S. Commerce Secretary Howard Lutnick confirmed this in an interview on CNBC.
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HOWARD LUTNICK: For national security, we need to make our own chips here. We cannot rely on Taiwan, which is 9,500 miles away from us and only 80 miles from China.
MARTIN: The CHIPS and Science Act, which was signed by President Biden, aimed to keep chip making in the U.S. by giving $8 billion in direct funding to companies. Now, instead of giving money to Intel, the Trump administration wants equity. Mackenzie Hawkins covers the semiconductor industry from Bloomberg, and she joins us now from Hong Kong to tell us more about this. Welcome. Thanks for joining us.
MACKENZIE HAWKINS: Thanks so much for having me.
MARTIN: So this idea of the government taking equity in a private business is something most of us don't remember. I mean, my understanding, this hasn't happened since World War II. So now the government is taking something called a golden share in Nippon Steel as part of its acquisition of U.S. Steel that allows it to appoint a board member and block certain moves. So as to the chipmaker Intel, what is the administration saying about why claiming a share of that company benefits the American people?
HAWKINS: So there's a lot that we don't know about what a U.S. stake in Intel would look like. Something that Lutnick did share yesterday was that the U.S. is not seeking a governing stake. It's nonvoting. What they're doing, they say, is converting CHIPS Act grants that were awarded under President Joe Biden. Intel reached a contract with the Biden administration - or under the Biden administration - for almost $8 billion in direct funding to support factors in the U.S. into equity. And in Lutnick's words, why are we giving a company worth 100 billion this kind of money? And what is in it for the American taxpayer? The answer Donald Trump has is we should get an equity stake for our money.
The administration has been pursuing what they call a, quote, "benefit of the bargain" for taxpayers under the CHIPS Act since the start of the admin. And this is sort of the first concrete example of a really substantive change that we see them potentially making to one of the CHIPS Act awards.
MARTIN: Could Intel say no?
HAWKINS: We haven't seen Intel comment specifically on this equity stake arrangement yet. You know, there's been a lot of whiplash for the company over the past couple of weeks. President Donald Trump called for Intel's new CEO's ouster over concerns about past ties to China and investments in China. We saw Intel CEO Lip-Bu Tan go to the White House, meet with the president and Cabinet members. Trump said he had an amazing story. And now we see this conversation where the administration is concerned about, you know, is Intel going to execute on these factories that they've promised, particularly in the state of Ohio and this major U.S. company that's critical to American national security strategy in the semiconductor sector? These are ongoing conversations. All Intel has said is they're committed to working with the administration, and they support the overall goals of revitalizing the American chipmaking industry.
MARTIN: So, you know, critics of the administration have said - or critics of this proposal have said that they fear that this is a leading edge toward nationalizing private business. Has the administration responded to that kind of criticism?
HAWKINS: So the administration says, you know, we don't want to sort of give blank checks to companies. We want - you know, we're not going to take a governing stake in Intel. Although, we have definitely seen Trump officials take a more sort of interventionalist approach into a range of sectors, not just semiconductors, also rare earths, as you mentioned, the Nippon Steel Deal. And they say, this is how we're going to get the benefit of the bargain for the taxpayer. How that actually shakes out over time will be really interesting to watch.
You know, there's a huge question of is Intel going to have customers to support this massive factory expansion? You need people to actually buy the chips. Treasury Secretary Scott Bessent said yesterday, quote, "there's no talk of trying to force companies to buy from Intel." But we've also seen Intel struggle to secure some of these orders. You know, Biden officials tried to encourage companies like Nvidia or AMD to kind of pursue manufacturing contracts with Intel. So there's - a lot remains to be seen over whether this equity stake makes a meaningful difference for the company's long-term production ambitions.
MARTIN: Very quickly, does this tie into Intel's plans to try to open two semiconductor plants in Ohio, which is the home state of Vice president JD Vance?
HAWKINS: It absolutely does. You know, a large share of Intel's nearly $8 billion CHIPS Act award was slated specifically to support that facility, which has been delayed several times.
MARTIN: OK.
HAWKINS: And we've reported that the Ohio facility is a major focus for the admin.
MARTIN: Mackenzie Hawkins covers the semiconductor industry for Bloomberg. Mackenzie, thanks so much for joining us.
HAWKINS: Thanks. Transcript provided by NPR, Copyright NPR.
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