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The federal government is now Intel’s largest shareholder, after President Donald Trump authorized a 10% equity stake in the flailing American chipmaker.

Trump’s move, which he described as a “great deal” and “wisdom,” departs from core Republican economic principles and has been decried by conservatives who are normally allies of the president. The president has said he intends to do more such deals in the future, and described the government’s purchase of the Intel stake as an investment that will make the United States “richer and richer.”

Economists used to call such industrial policy “the go-to of state planners the world over.” Critics of Trump have asked whether his move has crossed a line into socialism. Socialism has been in large part defined by its opposition for many decades, as government ownership or control of the means of production for the benefit of all of society. By that definition, many conservatives argue, Trump has not really deviated from the practices of countries like China or Russia.

Observers point to the political irony of the current situation, in which President Barack Obama’s efforts to take over control of Chrysler and General Motors at the height of the financial crisis in 2008–2009 were viewed by conservatives at the time as a necessary stopgap to save iconic American companies from collapse. If Obama had taken a 10% stake in Intel, Trump allies say, conservative media would have been accusing him of championing communism.

In Trump’s telling, this case is different. The president has framed the Intel deal not as a bailout, but as a smart investment. Trump has said he converted close to $9 billion in grants that had been allocated to Intel under President Joe Biden’s bipartisan Chips Act into equity for the federal government. The deal, he said, therefore created $10 billion to $11 billion in value to taxpayers immediately. “Why are ‘stupid’ people unhappy with that?” he asked.

Reactions from the Right

Larry Kudlow, Trump’s former top economic adviser, told Fox Business that he was “very, very uncomfortable with that idea.” Steve Moore, an informal Trump adviser, was more blunt: “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.”

The editorial board of National Review published an editorial ahead of the announcement of the Intel deal, warning that “government shouldn’t get into the chip business.” Senator Thom Tillis (R-NC) called the move an “alarm bell” for “a semi-state-owned enterprise a la CCCP,” the former Soviet Union. Senator Rand Paul (R-KY) similarly suggested the deal was a step toward socialism on X: “Wouldn’t the government owning part of Intel be a step toward socialism? Terrible idea.”

Progressive Senator Bernie Sanders (I-VT), however, praised the move, an example of a government using its power to direct the industry in a way that benefits society. Howard Lutnick, the commerce secretary, rushed to Trump’s defense during an appearance on Laura Ingraham’s show: “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 executives themselves have made clear they are wary of the deal, too. In a SEC filing required by the Securities and Exchange Commission, Intel said that the deal could deter the company from winning future government grants, depress global sales of Intel products, and subject the company to a more onerous regulatory environment. Intel announced earlier this year that it planned to lay off 15% of its workforce. The company’s market valuation is now at about $110 billion, down 50% since the beginning of this year. Its share price jumped 4% immediately following Trump’s announcement.

It was reported by The Wall Street Journal that Trump, before ultimately approving the deal, first insisted that Intel’s CEO, Lip-Bu Tan, resign from the company because of past work he had done with China. After a personal meeting in the White House, Trump apparently changed his mind. “I liked him a lot, I thought he was very good,” Trump said of Tan after the meeting.

Whether the U.S. government, acting as Intel’s largest shareholder, really means it won’t influence the company is also not yet clear. Intel did say that as part of the agreement, the U.S. government will be a non-voting shareholder that has agreed not to interfere with Intel’s day-to-day business operations. But in a system in which the president of the United States is the largest shareholder, many are going to be skeptical that his influence won’t be brought to bear.

As Intel’s former CEO Brian Krzanich said in an appearance on The Pivot Podcast, the biggest problem now is a loss of trust by the American people in the business and its direction. If Intel stabilizes and turns around, Trump will likely be able to take credit for shoring up a pillar of American technology. If it doesn’t, U.S. taxpayers could be left footing the bill. Trump has made clear that this will not be the last such deal he is willing to do, leaving the question of whether this is socialism, capitalism, or simply Trumpism still up for debate.

What is certain is that the Intel stake represents a fundamental change in the relationship between the federal government and the private business sector, and another example of how Trump has reshaped the Republican Party’s approach to the economy.