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On Thursday, the federal government became the largest shareholder in Intel after President Donald Trump signed off on a 10% stake in the ailing U.S. chipmaker. In a major break from Republican orthodoxy, the move has sparked a torrent of criticism from conservatives who otherwise support the former president.

Trump has justified the deal as a sound investment that will make the United States “richer and richer,” and he has suggested that Intel is just the first of many such investments. “I hope I’m going to have many more cases like it,” the former president said in an interview. The move, he said, was “smart because a lot of these companies are great companies that really have been treated unfairly.” Trump is clearly signaling a new direction for federal economic policy, an industrial policy of sorts in which the government plays an active role in developing and supporting key sectors.

Critics of the move say it goes beyond industrial policy and into the realm of socialism. For much of the past century, one of the defining characteristics of socialism has been the government’s ownership of the means of production on behalf of society as a whole. Trump’s move is not so different, by that definition, from what is seen in China or Russia.

The move is rich in political irony. When Barack Obama seized control of Chrysler and General Motors at the height of the financial crisis in 2008–2009, conservatives denounced him as a socialist bent on nationalizing American business. But if Obama had instead taken a 10% stake in Intel, conservatives and Trump allies say, conservative media would have called Obama a communist. “Look how we bailed out Chrysler,” Larry Kudlow, Trump’s former top economic adviser, said on Fox Business in May, when news of the Intel stake was first reported. “Compared to what we just did with Intel, that’s child’s play.”

Trump, of course, says this case is different. He is not bailing out the company, he points out, but instead investing in it. He said he converted $9 billion in grants that had already been committed to the company by Biden’s bipartisan Chips Act into equity for the U.S. government. The deal, Trump says, has created $10 billion to $11 billion of immediate value for taxpayers. “Why are ‘stupid’ people unhappy with that?” he added.

Pushback from Conservative Allies

The criticism from Trump’s allies is starting to pile up. Larry Kudlow, his former top economic adviser, said in an interview on Fox Business that he was “very, very uncomfortable with that idea.” Steve Moore, another of Trump’s informal economic advisers, was more blunt: “I hate corporate welfare. That’s privatization in reverse. We want the government to divest of assets, not buy assets. So terrible, one of the bad ideas that’s come out of this White House.”

National Review weighed in with an editorial titled “Government Shouldn’t Get into the Chip Business.” Senator Thom Tillis said he was “alarmed” by the development. “It’s a quasi-nationalization of a piece of an iconic American company,” he told reporters. The deal will create “some sort of semi-state-owned enterprise a la CCCP,” Tillis added, invoking the old Soviet Union. Senator Rand Paul made the same point in a tweet: “Wouldn’t the government owning part of Intel be a step toward socialism? Terrible idea.”

Not everyone is critical. Senator Bernie Sanders has hailed the move as a sensible example of the government using its power to shape the economy for the benefit of the public. Commerce Secretary Howard Lutnick has rushed to Trump’s defense, saying on Laura Ingraham’s show: “That is not socialism. That’s the best businessman in the United States of America in the Oval Office doing fair things for us.”

Intel’s Own Concerns

Intel itself had a warning for investors on Thursday. In a required filing to the Securities and Exchange Commission, the company said Trump’s move would “have the effect of decreasing our ability to obtain future government grants,” would “deteriorate” foreign sales, and could lead to “greater government regulation” of the company’s activities. (Intel, which has 115,000 employees worldwide, had already announced layoffs of 15% of its staff earlier this year and has a market cap of around $110 billion, down 50% since the start of 2024, before rallying 4% after Trump’s announcement.) The WSJ reported Thursday that Trump initially wanted Intel CEO Lip-Bu Tan to resign over the fact that he was born in China and attended university there. Trump apparently relented after meeting Tan at the White House. “I liked him a lot, I thought he was very good,” Trump told reporters afterward.

The government has pledged not to interfere with the company’s business decisions, and the Treasury Department has emphasized that its holding in the company is non-voting. But it is naive to think the president of the United States won’t exert influence if his administration holds a majority of a company’s shares. Trump, at least, has made clear where he stands on that. Intel’s stock price may have gone up on the news, but the company itself is hardly celebrating its new relationship with the federal government.

Whether Intel stabilizes or continues to decline is a direct test of Trump’s decision and will help determine how history views the matter. Trump, of course, has pledged to continue these types of arrangements, and his campaign team has indicated he will accelerate them should he be reelected. Is this socialism, or is it capitalism? Or is it simply Trumpism? For now, it’s enough to say that Trump has fundamentally upended the federal government’s relationship with the business community.