The problem here is not the US government taking a stake in Intel. The problem is the executive ignoring statute and extorting management into surrendering that stake. It’s very stupid of Bernie to support the first thing even if he agrees with the outcome (or even if he agrees with the extortion).
I am shocked Bernie would do something stupid because it agrees with his priors
🙄
I mean it would have been less problematic if they did a DIP like 2008 but there is no evidence to suggest even that was necessary. SoftBank announced some financing before this was finalized and certainly others would participate if the USG backstopped them. Really it’s just how he gets his SWF.
If Bernie were a smart guy he’d have a heck of a lot more to show for his many years in Congress.
Intel was already entitled to every dollar they are getting in exchange for that equity. They got no additional benefit at significant additional cost. Lip came up with the idea to avoid Trump just seizing funds Intel had already been promised by the government. It was extortion.
This exactly. Intel was *already* owed that money, a detail that is barely discussed in every news story on this deal.
No, they weren't. They were likely to fail to meet the requirements for continued funding under the CHIPS Act and were actually at potential risk for clawback. CHIPS Act grants are not unconditional; they're contigent and have clawback provisions. Intel wanted to escape that risk.
But the CHIPS Act is still funding the transaction, so the conditions still apply! The inclusion of an equity stake does not change anything!
Shrug. Trump ignoring the law is fairly normal. It's clear that Intel believes that converting it to an equity transaction exempts them from future oversight or the risk of a clawback. I totally agree that there's no statutory basis for any of this
"Trump ignoring the law is fairly normal" oh well okay then
I'm not arguing that the deal is mad insane legally, but honestly nobody should be surprised when Trump ignores the law
There are arguably good public policy reasons for the US to have a stake in a foundry, but _Intel doesn't have a viable foundry_ and doesn't look likely to produce one soon, even with grants or other investment, so they're just a bad candidate that and there's just no statutory basis for the deal
With Trump suggesting today he wants to repeat this model, I don't understand how markets are just so "eh" about it. Markets don't care a lot about Trump's attacks on rule of law, vendettas, taking company share, and more.
Why would any company (unless they need it to avoid going under) accept money from the next CHIPS-like bill if there's a non-zero chance the government is going to use that as an excuse to seize an ownership stake?
I find it fascinating that a lot of people on the right are supportive of the Intel initiative (gov't should take stake in companies being rescued) and pushed back against bank takeovers during the GFC.
I mean it's not fascinating at all IMO they're just hypocrites
See my shocked face 😱
It's incredible how Intel even managed to get into this situation. They don't even have that much competition in several of their fields. You tell people 10-15 years ago Intel would be in trouble and they'd call you crazy. Almost like Boeing in how little sense it makes.
fully agree
I guess the question is was Intel going to be able to meet the requirements to get the rest of the funding. Was their business really in that much trouble?
He's taking a lot of Ls lately.
He only read Mazzuccato, poor hunny. :)
I don't think there was any "extortion" involved; I think Lip Bu-Tan was the originator of the proposal and that he talked Trump into it. Intel is dying; the deal is hospice care, at public expense, so Intel can die more gracefully and its executives can walk away from the corpse in greater comfort
I don't think the deal was in the interest of the US, nor do I think it was authorized by statute, but let's be clear here: it's the US that is getting reamed here, not Intel.
Whether this is the case or not, it matters deeply that this is very much Not How It Is Done.
Oh, yes, I agree with that 100%. But I don't agree with characterizations of this as "extortion of Intel" because I'm fairly certain that Intel effectively proposed the deal and Intel, or at least its executives and board, are the main beneficiaries of it
I mean if Intel proposed it, they proposed it because of The Implication. The "payment" for these shares is money the government was already obligated to give them—it's just well known that Trump doesn't care about the law. The implication is that if they didn't, he'd withhold the money.
If it looks like extortion from the outside and people let it appear as though that’s what it is, then it legitimizes the tactic, is the thing.
I think this has a lot to do with Lip Bu-Tan being way smarter than Trump here. The timeline makes it clear: five days ago Trump wants Tan fired, then he meets with Tan, and then after meeting with him mumbles about how the US should get 10%, and then it happens. Clearly, Tan played Trump and won
The best way to get Trump to do something is to put an idea in his head and make him think that you'd hate it if he did that. There's no doubt that Tan is smart enough to figure this out and maneuvered Trump into giving Intel exactly what it wanted
As to why Intel wanted this: Intel is dying: their CPU business is faltering, they are nowhere in GPU/HPC, and their foundry is nowhere. Intel has no hope of surviving the coming recession. PC sales are going to plummet and x86 CPUs are 60% of Intel's revenue and Intel has basically no reserves
Intel made its last effort to remake themselves with their foundry project, and failed. They're cooked. All that's left is to strip the carcass for the parts
CHIP act absolutely should've funded investments in exchange for equity, just standard industrial policy stuff elsewhere in the world, but yeah, that's not what's happening here
Buying stock as an act of Congress has precedent, extorting grant money for stock has none.
Correct.
Intel was not going to meet the requirements in the CHIPS Act to receive the disbursements it was hoping for (they all but said so in their most recent SEC filings)
are there clear parameters/guidlines around who/what department specifically manages the shares? Can they sell at will, write calls against them? Did intel send paper certificates, or does the gov have a fidelity/vanguard account?
Things like this are why I'm not a stan for him or any politician 🤷♀️🚮
At time of providing funds? reasonable Post hoc, randomly and specifically for no real aim or purpose? bad bad bad
Bernie is so polarized against ineffectual process-minded Dems accepting terrible outcomes that he’s doing the reverse, which is just as bad.
no i think he has some genuine galaxy brained takes and, worse, seems to still think in his own way that “bipartisan” means a goddamn thing to anyone with any integrity at all.
I generally feel that a lot of this is downstream of his age. I liked him a lot in 2016 sans poor staffing decisions. Frankly I think he should ride off into the sunset, though I do have to admit his red state tour with AOC was some inspiring grassroots work
yes the tour was v smart. Listening to both speeches one after the other also helped me solidify why i like her and not so much him.
Giving bipartisan gloss to an illegitimate “president” using gangster tactics to illegally extort people and businesses is, in fact, bad.
I can see why Bernie is going to support this, the question is why is the Republican “free-market” party not screaming socialism.
Because they never had any principles in the first place and nothing matters anymore
True dat!
bsky.app/profile/rain...
There’s a reason C-suites in permit related industries have privately started talking about concerns of equity requests.