Cato Institute Criticizes $11.1B Intel Investment as "Terrible Decision"

The US government has invested $11.1B in Intel, a move criticized by the Cato Institute as "terrible for almost everyone". The Cato Institute argues that the investment is bad for Intel shareholders, taxpayers, and consumers, as it distorts the market and could lead to higher prices for consumers. Intel has described the agreement as "historic".

The U.S. government has recently confirmed a significant investment of $11.1 billion in Intel (NASDAQ:INTC), a move that has sparked both praise and criticism. Intel, a longstanding player in the semiconductor industry, has described the agreement as "historic," while critics, such as the Cato Institute, have labeled it a "terrible decision bad for almost everyone" [1].

The investment, which involves converting some or all of Intel's $10.9 billion in CHIPS Act grants into equity, would make the U.S. government Intel's top shareholder. This move is part of a broader initiative by the U.S. government to secure equity stakes in key semiconductor manufacturers in exchange for substantial grants to build factories in the United States [2]. The U.S. Commerce Department has already finalized subsidies totaling $4.75 billion for Samsung, $6.2 billion for Micron, and $6.6 billion for TSMC to expand semiconductor production in the U.S., but much of the $52.7 billion in CHIPS Act funding remains undispersed [2].

Intel's shares initially welcomed the news of possible U.S. support, driving shares up nearly 9% on Aug. 14. However, shares fell 3% the following day on a Bloomberg report, then jumped more than 5% overnight after SoftBank announced a $2 billion investment, which would make it Intel's fifth-largest shareholder [2]. This volatility highlights the uncertainty surrounding the deal and its potential impact on Intel's stock performance.

Critics argue that the investment is bad for Intel shareholders, taxpayers, and consumers. The Cato Institute contends that the government's involvement distorts the market and could lead to higher prices for consumers. However, proponents of the deal maintain that it is necessary to bolster Intel's foundry business and align with the administration's national security goals. The deal remains uncertain, with no confirmation that the White House has approached Intel or other firms directly [1].

The initiative highlights the U.S. government's commitment to bolstering its domestic semiconductor industry and ensuring national security in the face of global competition. While the specific details of the equity stakes are yet to be determined, this move represents an unprecedented shift in U.S. influence over major corporations, raising questions about the potential impact on corporate decision-making and the balance between government oversight and private enterprise [1].

References:
[1] Reuters. (2025, Aug 19). U.S. wants company equity in exchange for billions of dollars of CHIPS Act grants. Retrieved from https://www.reuters.com/legal/government/trump-eyes-us-government-stakes-other-chip-makers-that-received-chips-act-funds-2025-08-19/
[2] Yahoo Finance. (2025, Aug 14). Trump administration weighs 10% stake in Intel. Retrieved from https://finance.yahoo.com/news/trump-administration-weighs-10-stake-203119908.html