Josh Weiner
When Donald Trump announced a multi-billion-dollar support package for Intel, the move was framed as a bold step toward securing America’s technological future. But beneath the headlines lies a riskier calculation—one that highlights the perils of governments attempting to “pick winners” in an industry as dynamic and competitive as semiconductors.
The Push for Technological Sovereignty
The semiconductor industry has emerged as the battleground for economic and geopolitical supremacy. Chips power everything from smartphones to fighter jets, and the COVID-19 supply chain disruptions exposed the vulnerabilities of America’s reliance on Asia, particularly Taiwan and South Korea, for advanced semiconductors.
Trump’s deal with Intel aims to tackle this dependency head-on. By channeling billions in subsidies, tax credits, and government-backed purchasing commitments into the company, the administration hopes to accelerate domestic chipmaking capacity and make Intel the undisputed “national champion” of American semiconductors.
This fits into a broader trend of economic nationalism. Governments from Beijing to Brussels are pouring resources into semiconductor self-sufficiency, seeing it not just as an industrial issue but as a matter of national security. For Trump, the bet on Intel is also political: a chance to demonstrate his commitment to reshoring manufacturing jobs and reducing reliance on foreign suppliers.
Intel’s Uneven Track Record
But the choice of Intel as America’s champion is not without controversy. Once the undisputed leader in semiconductor innovation, Intel has stumbled in recent years. Production delays, missed deadlines on next-generation chips, and fierce competition from rivals like Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea’s Samsung have dented its reputation.
While Intel still holds enormous resources and technical expertise, many analysts argue that the company has been slow to adapt to industry shifts, such as the rise of contract chipmaking and the growing role of fabless firms like Nvidia, AMD, and Qualcomm.
“Intel has the legacy and the scale, but its recent missteps show why betting on one firm is dangerous,” said Michelle Donovan, a semiconductor analyst at TechSphere Research. “The chip industry moves too fast, and innovation often comes from unexpected players.”
The Dangers of Picking Winners
Trump’s deal underscores a classic dilemma in industrial policy: the temptation to back a single company as a “national champion.” While this strategy can accelerate investment and create economies of scale, it risks concentrating too much power and taxpayer money in one corporate entity.
History offers plenty of cautionary tales. In the 1980s, Japan’s government heavily supported its domestic chipmakers, only to see them eclipsed by more nimble global competitors. More recently, China’s lavish state subsidies have propped up firms that struggled to deliver breakthroughs, raising questions about wasted resources.
“Governments are notoriously bad at forecasting which companies will succeed,” said Wharton professor Jeremy Siegel. “Markets are unpredictable, and innovation rarely follows political blueprints.”
National Security vs. Market Efficiency
The stakes, however, extend far beyond economics. Advanced semiconductors are critical to defense, artificial intelligence, and cybersecurity. Trump’s backers argue that America cannot leave such a strategic sector entirely to market forces, particularly given the risks of conflict in the Taiwan Strait.
By anchoring advanced manufacturing at home, the deal with Intel is intended to ensure supply chain resilience in the event of geopolitical disruptions. The Pentagon has reportedly been supportive, seeing Intel as a partner capable of building chips for sensitive defense applications.
Yet this logic creates a trade-off. The more the U.S. government ties its security strategy to one firm, the more vulnerable it becomes to that company’s performance. If Intel fails to deliver, America risks both financial losses and strategic setbacks.
The Global Dimension
The Intel deal also highlights the global dimensions of the semiconductor race. Europe is pushing ahead with its own “Chips Act,” South Korea has pledged billions for Samsung and SK Hynix, and Taiwan continues to double down on TSMC’s dominance. The U.S. risks sparking subsidy wars as each nation scrambles to secure its position.
Moreover, the strategy could complicate alliances. Some policymakers worry that elevating Intel as a U.S. national champion could alienate key partners like Taiwan, whose TSMC remains the global leader in cutting-edge chips. “If America appears to be undermining TSMC while bolstering Intel, it could strain ties at a time when unity is critical,” warned a former U.S. trade official.
Balancing Vision With Prudence
Trump’s Intel bet captures both the promise and peril of industrial policy in a world where technology has become the linchpin of power. Supporters hail it as a necessary intervention to rebuild U.S. manufacturing strength, secure supply chains, and protect national security. Critics counter that it risks wasting resources, distorting markets, and binding America’s future to a single firm with an uneven track record.
The outcome will likely depend on execution. If Intel can leverage the funding to regain technological leadership and deliver results, the gamble may be vindicated. But if the company stumbles again, Trump’s deal could be remembered as an expensive experiment in corporate favoritism.
Conclusion: A High-Stakes Bet on America’s Future
At its core, the Intel deal reflects a broader shift in U.S. economic strategy: away from free-market orthodoxy and toward active state intervention in strategic industries. Whether this represents prudent foresight or risky overreach will depend on how effectively Intel can deliver—and how flexibly U.S. policymakers can adapt if it does not.
For now, America’s semiconductor future is riding on one giant bet. And as history shows, the costs of choosing the wrong champion can be as great as the rewards of choosing the right one.
