The Trump administration's decision to take a 9.9% stake in Intel for $8.9 billion represents a missed opportunity of historic proportions. Rather than converting existing taxpayer grants into passive equity in a struggling company, the government should pursue a bolder, more strategic path: acquire Intel's foundry operations and spin them off as an independent national semiconductor manufacturer.
The Intel Paradox: Don't Subsidize Failure
Intel's $19 billion loss last year resulted from product delays, strategic missteps, execution failures, and chronic underutilization of manufacturing capacity across multiple business lines. Intel has become the Yahoo of the chip business – a once-dominant player brought low by a board with a history of poor strategic choices that has selected one failed CEO after another, creating a pattern of strategic confusion and missed opportunities.
The current CEO, Lip-Bu Tan, was selected in March 2025 by this same board that presided over Intel's decline. While his tenure is too brief for full evaluation, he inherits the same structural problems that have plagued Intel for years. Meanwhile, AMD demonstrates that American semiconductor companies can thrive through disciplined execution and strategic focus, proving the problem isn't American chip capabilities – it's Intel's specific organizational failures.
The current passive investment structure forces taxpayers to subsidize Intel's entire struggling enterprise. The $8.9 billion comes from converting previously awarded CHIPS Act grants and Secure Enclave program funding – money already committed to Intel, now transformed into equity ownership. Yet taxpayers get no board seats, no governance rights, and the government must vote with management on most decisions, offering no mechanism to address the underlying problems.
The corporation faces deep structural and strategic challenges – the same board that presided over Intel's decline continues making critical decisions. Why would they suddenly choose competent leadership or strategy now? As Warren Buffett wisely observed: "Both our operating and investment experience cause us to conclude that turnarounds seldom turn, and that the same energies and talent are much better employed in a good business purchased at a fair price than in a poor business purchased at a bargain price."
Intel represents exactly this kind of poor turnaround bet. The government shouldn't wager taxpayer money on Intel's corporate recovery when history shows such turnarounds rarely succeed, especially when the same leadership structure remains in place.
A Better Path: The National Foundry Solution
Rather than propping up Intel's entire struggling enterprise, the government should target what actually matters for national security: the foundry operations. Here's how it would work:
Separate the wheat from the chaff: Intel's foundry operations represent genuine strategic value, but they're trapped inside a broader corporate structure that's hemorrhaging money on unrelated ventures. The foundry business doesn't need to subsidize Intel's failed product lines or corporate bloat.
AMD proves American chips can work: While Intel bleeds money, AMD demonstrates that American semiconductor companies can thrive with the right strategy and execution. The problem isn't American chip design – it's Intel's specific mismanagement.
Competitive neutrality: Unlike Intel's foundry, which competes with potential customers, a national foundry would serve all American chip companies without conflicts of interest.
Direct oversight: Government ownership would ensure strategic priorities align with national interests, not quarterly earnings targets.
Why This Makes Strategic Sense
The foundry has potential: While Intel's foundry business is currently losing billions due to mismanagement and lack of external customers, the underlying manufacturing capabilities and infrastructure represent genuine strategic value. A spun-off foundry wouldn't carry the burden of Intel's losing divisions and could focus entirely on becoming profitable.
Attract all customers: Companies like Apple, Nvidia, and AMD might hesitate to use Intel's foundry since Intel competes with them. A neutral national foundry removes this barrier.
Speed of execution: Rather than waiting for Intel's corporate turnaround, a focused foundry entity could move quickly to serve urgent national security needs.
The Taiwan Lesson and Path Forward
America's chip dependence didn't happen overnight – it was the result of decades of offshoring to take advantage of lower costs. Taiwan Semiconductor Manufacturing Company (TSMC) didn't become the world's most advanced foundry by accident; it succeeded through sustained government support and strategic focus on pure-play manufacturing.
Countries like South Korea and Taiwan have successfully used government-industry alignment to build world-class semiconductor capabilities. The current approach essentially asks Intel to become TSMC while also remaining Intel – maintaining both design operations that compete with potential foundry customers and manufacturing services for those same competitors. This dual role creates inherent conflicts and makes neutral customer service nearly impossible.
A standalone national foundry could pursue the proven TSMC model directly: become the world's best contract manufacturer of advanced semiconductors, serving all American chip companies without competitive conflicts.
Addressing the Risks
Critics will argue that government ownership reduces efficiency and innovation. But the status quo – complete dependence on foreign manufacturing – is a far greater risk. The COVID-19 pandemic and ongoing U.S.-China tensions have demonstrated how supply chain vulnerabilities can paralyze entire industries.
Moreover, the government already bears the financial risk through the current Intel deal. The question is whether taxpayers get better results from a passive investment in Intel's recovery or active ownership of America's most strategic manufacturing capability.
The Bottom Line
America's semiconductor crisis demands bold action, not incremental fixes. Converting grants to equity stakes may seem innovative, but it leaves taxpayers exposed to Intel's broader corporate struggles while limiting our ability to direct the strategic assets we're funding.
A national foundry represents a genuine solution: focused mission, government oversight, competitive neutrality, and direct service to America's semiconductor needs. It's time to stop betting on Intel's turnaround and start building America's semiconductor future.
The infrastructure exists, the talent is available, and the strategic imperative is clear. What we need now is the political will to pursue a national foundry strategy that puts America's semiconductor independence first.
The author advocates for strategic government investment in critical national infrastructure and has followed semiconductor policy developments closely.