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The federal government has become Intel’s largest shareholder after President Donald Trump agreed to a 10% stake in the flailing American chipmaker. The move not only marks a dramatic departure from Republican orthodoxy, but it’s also infuriating conservatives who are normally on the same team as the former president.

Trump, for his part, is touting the deal as a no-brainer investment that will make the United States “richer and richer.” He’s also all but promised more to come. “I hope I’m going to have many more cases like it,” he said. Trump’s new direction looks a lot like what used to be called industrial policy: the idea that government should play an active role in bolstering major industries, rather than letting market forces reign.

So will this be the moment the leader of the Republican Party crossed over into socialism? The question might sound theoretical, but socialism has for many years been defined in part by the extent to which government takes ownership of “the means of production” on behalf of all members of society. By that measure, Trump hasn’t so much steered Intel towards socialism as he has admitted it already arrived.

Take a look at places like China or Russia. The Chinese government’s direct ownership of the means of production is only about 20% of the economy. Russia’s is in the single digits. And yet, neither the United States nor any other Western country even tries to argue that these countries aren’t socialist states.

The political irony is palpable. When then-President Barack Obama took majority control of Chrysler and General Motors in 2008–2009, it was celebrated by most conservatives at the time as a Hail Mary move to save iconic American firms from bankruptcy. If Obama had taken a 10% stake in Intel, one Trump ally told me, “Fox News and conservative radio would have called it communism.”

Trump Says No Bailout

The former president is emphatic that this isn’t a bailout, but an investment. After his administration converted nearly $9 billion in grants to Intel (grants that were provided to the company under Joe Biden’s bipartisan Chips Act), Trump explained, he was able to buy the U.S. government’s equity stake in the firm. In so doing, he said, his decision created $10 billion to $11 billion in value for taxpayers at a stroke. “Why are ‘stupid’ people unhappy with that?” he asked.

Critics have been piling on. Larry Kudlow, Trump’s former top economic adviser, told Fox Business that he was “very, very uncomfortable with that idea.” Steve Moore, another informal economic adviser, put it more strongly: “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.”

Editorials in National Review have warned that “government shouldn’t get into the chip business.” Senator Thom Tillis said the decision threatened to create a “semi-state-owned enterprise a la CCCP.” Senator Rand Paul later quoted him on social media: “Wouldn’t the government owning part of Intel be a step toward socialism? Terrible idea.”

One progressive wasn’t mad at all. Senator Bernie Sanders gleefully tweeted out his approval of the decision. At the same time, the Commerce Department’s new Howard Lutnick tried to explain to Laura Ingraham that “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 Has Warnings, Warns About Trump Decision

Intel’s own response to the deal might be the most worrying signal to its future investors and partners. In a filing to the Securities and Exchange Commission, the company warned that the deal could reduce its ability to win future government grants, cause long-term damage to international sales, and mean more government oversight and regulations on its business operations.

Intel, which had previously announced this year it would cut 15% of its staff, hasn’t revealed how many people it plans to keep or fire, and said it’s “too early to tell” on many of the company’s growth plans.

The company’s current market capitalization is about $110 billion, down 50% since the start of 2024. But Intel’s shares rose 4% after Trump’s announcement. The Wall Street Journal reported that Trump had first asked Intel CEO Lip-Bu Tan to resign because of his previous business connections in China, but changed his mind after meeting the company’s chief in the White House.

It’s not just Tan’s past that investors should be worried about. The decision has also upset Intel’s leadership. According to the Journal, Chief Operating Officer Loueck Cha is expected to leave in a few months. Intel’s board chair, Omar Ishrak, has discussed the decision with Trump only three times in the past two years, the newspaper reported.

The SEC filing also said the government’s majority position in Intel’s shareholder base would result in it “exercising substantial influence over our corporate decisions.” The White House has promised that it won’t be the case, but investors know that when the president of the United States is your largest shareholder, influence can be surprisingly hard to resist.

This is why conservatives are mad at Trump, too. He’s normalizing the very thing their ideology tells them is bad. If Intel’s future is rosy, Trump will get the credit for saving a bedrock of American technology. If it becomes a money pit, American taxpayers will foot the bill. With Trump promising to do more deals like this one, this has only begun.

It’s not just the chip industry either. The White House has made it clear that the U.S. government will be open to similar investments in other industries in the future. One tech executive told me he was wary of the whole arrangement “regardless of party,” while a second investor said, “I’m still digesting it.” As of right now, it looks like the Treasury Department and White House have the inside track on all this in terms of expertise.