Trump demanded an equity stake in Intel. Guess who else wanted that. Next up, a tax on patents.
Trump, Intel Agree to 10% U.S. Stake
The Wall Street Journal reports Trump, Intel Agree to 10% U.S. Stake as President Promises More Deals
The U.S. government is taking a 10% stake in Intel, a deal that caps a two-week frenzy for the troubled chip maker and marks the latest in a series of extraordinary private-sector interventions by President Trump.
Under the terms of the agreement, $8.9 billion in grants that had been awarded to Intel from the 2022 Chips Act, but not yet paid, will be converted to equity, the two sides said Friday. The government could get more stock depending on what happens to Intel’s chip manufacturing business.
The deal is a remarkable turnaround. Just over two weeks ago, Trump called for Intel CEO Lip-Bu Tan to be fired for his ties to China. After meeting Tan and talking about the business last week, Trump became a fan and saw an opportunity to deepen their partnership, he said Friday.
“I said, ‘I think you should pay us 10% of the company,’ and they said yes,” Trump said in the Oval Office.
Cheers from Socialists
Also consider Inside Intel’s Tricky Dance With Trump
In return for Trump’s support, the administration proposed taking an equity stake in the company. It decided to convert nearly $9 billion in grants—promised to Intel as part of the 2022 Chips Act—into a 10% equity stake in the company, an unusual arrangement that makes the government Intel’s biggest shareholder.
The meeting was the pivot point in a frenzied period for Intel, once one of America’s most venerated technology companies, now stuck in a yearslong downward spiral. The company’s scramble to control the fallout from the president’s demand that Tan step down—triggered by a Fox Business Network segment—underscores the unpredictable environment major corporations face under Trump.
“He came in, he saw me, we talked for a while. I liked him a lot, I thought he was very good,” Trump said of Tan from the Oval Office. “I said, ‘You know what? I think the United States should be given 10% of Intel.’ And he said, ‘I would consider that.’”
In his first term, Trump touted Intel’s plans for a $7 billion manufacturing plant in Arizona. Trump advisers began discussing what became the Chips Act, wanting to attract companies such as TSMC to the U.S.
While the bill was being negotiated, senators including Bernie Sanders (I., Vt.) and Elizabeth Warren (D., Mass.) pushed unsuccessfully for a version that would see the government receiving equity in companies it backed.
Wish Granted
Trump delivered the government stake Warren and Sanders wanted.
The Cult cheers. It booed when Warren and Sanders wanted to do that.
Government Tenacles
The president won a “golden share” of control over Japan’s Nippon Steel in return for allowing it to take over U.S. Steel. And last month, Trump struck a deal with Nvidia and Advanced Micro Devices for the federal government to take 15% of their chip sales to China in return for allowing the exports.
In early July, the Defense Department took a minority stake in MP Materials, a maker of rare-earth magnets.
Trump Seeks a Patent Tax
If the above was not bad enough, please note the possibility of a New Tax on Patents.
Congress has delegated the U.S. Patent and Trademark Office authority to set patent fees within certain parameters. They must be reasonable “only to recover the aggregate estimated costs” of USPTO activities. The agency currently charges flat fees to apply for, maintain and renew patents.
Trump officials are reportedly discussing overhauling this system by imposing a tax of 1% to 5% on the government-assigned value of patents. The idea is for the government to reap some of the reward on an invention. This would reduce the return on innovation, resulting in less of it. That’s what taxes do. But encouraging investment and innovation is why Congress provided full expensing for research and development in the recent tax bill.
Such a scheme would also empower the administrative state. A patent’s value is subjective, and it can rise and fall with technological and market shifts. Many products are protected by dozens or hundreds of patents, which makes it hard to calculate the contribution of any given one to a product’s value.
Bureaucrats would assign an arbitrary value to hundreds of thousands of patents. This would give the government more power over companies, which may be one of the Administration’s goals.
Congress hasn’t authorized such a patent tax, so it isn’t clear the Commerce Department even has the legal power to impose it. But these days that doesn’t seem to matter. Corporate statism is riding high.
Why aren’t Republicans pushing back on Mr. Trump’s Intel deal? They might consider how the next Democratic President could use the government’s stake to press the left’s political imperatives—Intel profits to build low-income housing? Statism is gaining currency on the political left and right, resulting in a bizarre fusion of ideas.
Mercy!
