The government intervenes on behalf of its investment.
Conservatives warned last year when the government took a 10 percent stake in Intel that the Trump administration — free of any free-market pretensions — would seek to systematically advantage the chipmaker. Having the state on your side is a great way for companies to get ahead, as it can throw its coercive weight around on your behalf.
Today, that warning is realized. The Wall Street Journal reports:
Apple and Intel have reached a preliminary agreement for Intel to manufacture some of the chips that power Apple devices, according to people familiar with the matter.
Intensive talks between the two companies have been ongoing for more than a year, and they hammered out a formal deal in recent months, these people said.
Seems innocent enough: Apple needs more chips, Intel has them. Then you see the fine print:
The Trump administration last summer struck a deal to convert nearly $9 billion in federal grants into Intel stock, giving the U.S. government a 10% stake in the chip maker. It played a key role in bringing Apple to the table.
Commerce Secretary Howard Lutnick has met repeatedly over the past year with high-ranking Apple officials, including Chief Executive Tim Cook, as well as SpaceX chief Elon Musk and Nvidia Chief Executive Jensen Huang, to try to convince them to get into business with Intel, some of the people familiar with the matter said. With the Apple deal, Intel has now signed partnerships with all three.
In other words, the government is acting like any good investor, advancing the company’s interests. The problem is that the Trump administration is not like a regular investor. All the deals it brokers are backed, even implicitly, with the threat of punishment or the lure of reward. Apple relies on the Trump administration for exemptions from its tariff regime. Nvidia needs the government to keep letting it around export controls. SpaceX could not exist without federal contracts.
Maybe Intel was the best supplier for Apple on the merits. But, as the Journal notes, Intel has fallen badly behind more-advanced competitors such as Taiwan Semiconductor Manufacturing and Samsung Electronics “after a series of technical missteps, leadership changes and failed attempts at consolidation led outside foundry customers to pull or curb their business.” Why should the government privilege one lackluster semiconductor company over all the others?
Ah, right, because taxpayers now have a material interest in Intel’s success. More market intervention is the logical result of past market intervention. The real puzzler is why taxpayers needed to own a slice of Intel in the first place.
That is the way of “Trump capitalism.” Private companies are not part of civil society — as distinct from government — to be enabled and respected. They are organs of the state, just waiting to be bullied into alignment.