U.S. Government Considers Equity Stakes in Companies: The Rise of an American Sovereign Wealth Fund
The U.S. government is considering taking equity stakes in more companies, potentially through an American sovereign wealth fund, as suggested by National Economic Council Director Kevin Hassett. Recently, the government acquired a nearly 10% stake in Intel using funds allocated for grants under the CHIPS and Science Act. Hassett compared this move to a down payment on a sovereign wealth fund, a common practice in other countries.
The CHIPS Act was designed to provide financing and capital to companies manufacturing semiconductors in the U.S., resulting in over $200 billion in private capital investments and the creation of new jobs. While the government has previously taken ownership stakes in private companies during crises like the 2008 financial crisis, the Intel investment was deemed a special circumstance due to the significant CHIPS Act spending directed towards Intel.
Hassett emphasized that the government is not in the business of picking winners and losers but acknowledged that more transactions, potentially in other industries, could occur in the future. The U.S. government's ownership stake in Intel and U.S. Steel, as well as revenue-sharing agreements with chipmakers like Nvidia and AMD, reflect a shift towards more active involvement in private industry.
President Trump's assertion that the U.S. paid nothing for the Intel stake contradicts the $8.9 billion spent to acquire 433.3 million Intel shares. Trump's interventions in private industry, including pressuring companies to change products and threatening retaliation for price hikes due to tariffs, have drawn criticism from both Democrats and Republicans. Despite the controversy, the government's increased involvement in companies like Intel may signal a shift towards a de facto sovereign wealth fund managed by the U.S. Treasury.