Uncle Sam shouldn't own Intel stock

Didn't we already cross this particular Rubicon during the auto bailout a decade ago?

Other examples:

> Since the 1950s, the federal government has stepped in as a backstop for railroads, farm credit, airlines (twice), automotive companies, savings and loan companies, banks, and farmers.

Every situation has its own idiosyncrasies, but in each, the federal government intervened to stabilize a critical industry, avoiding systemic collapse that surely would have left the average taxpayer much worse off. In some instances, the treasury guaranteed loans, meaning that creditors would not suffer if the relevant industry could not generate sufficient revenue to pay back the loans, leading to less onerous interest rates.

A second option was that the government would provide loans at relatively low interest rates to ensure that industries remained solvent.

In a third option, the United States Treasury would take an ownership stake in some of these companies in what amounts to an “at-the-market” offering, in which the companies involved issue more shares at their current market price to the government in exchange for cash to continue business operations.

https://chicagopolicyreview.org/2022/08/23/piece-of-the-acti...

First, what came out of these bailouts?

Each example industry continues to require some sort of government intervention to remain solvent at one point or the other. Auto/banks/saving and loans getting bailouts in 2008/2009. Airlines in 2020/2021 due to COVID etc. These industries employ a lot of people and now have become a political hot zone for voters so there is no way to remove these backstops now.

And whether these industries remain competitive globally is another question. Because it is always funny to hear countries accuse each other of propping up one industry or other through government intervention.

Second, these were industry wide bailouts. This action is not.

The genesis of CHIPS Act is a 2020 deal to onshore TSMC. The idea was to further persuade Samsung and Intel to produce chips in US through tax benefits, loan guarantees and grants. But now with US taking a stake in Intel, the strategy for onshoring TSMC and Samsung becomes unclear. Maybe the idea is to use tariffs to make TSMC and Samsung uncompetitive if they don't onshore but that is a bad idea. Because if Intel finds it easier to just coast on "national security" and continue producing last gen chips, they are going to do that and lower innovation even more. This is a win-win for Intel though.

Also, if you are TSMC and Samsung, why bother “on-shoring” to America and not just make Americans pay the tariffs since there are no alternatives and it is unlikely that America can really compete. They will also be fighting the current as BRICS/Asian momentum picks up right in their front yard.

I mean for TSMC, a fab in Arizona means they can manufacture chips for drones and planes and ships even if Taiwan is blockaded and under assault.

Given with how poorly Ukraine has been treated, why would Taiwan ever think they could easily get an emergency supply of chips for drones and planes exported from the US and past a Chinese blockade?

If Trump or someone similar is in the office I'd expect that there would be demands that the chips stay in the US to protect the country from Chinese aggression unless there is some kind of bribe.

It's not like they have a great hand to play, especially if China is going in 2027 the way people think.

If there weren’t other players in the game that might be true. As it is, though, the EU is rapidly rearming, and has proven itself to be far more principled and stable in the Ukraine conflict.

I wouldn’t trust a deal done with the USA to be worth anything right now. I would trust a deal done with Europe, Korea or Japan. All of whom would love to have TSMC build a fab in their respective territories.