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Alexis Madrigal: Welcome to Forum. I’m Alexis Madrigal. As China rose economically in the early twenty-first century, it was often described as having an economic system that was capitalism with Chinese characteristics — meaning there were markets, entrepreneurship, and competition, but also the Chinese state and Communist Party played a heavy role in the functioning of the economy, especially around powerful industries and companies.
We’re looking at the deals that Donald Trump’s administration has cut with chipmakers Nvidia and Intel over the last month. Perhaps we’re seeing “socialism with mega characteristics.” With Nvidia, the U.S. government will be taking a cut of the company’s profits from selling chips to China. The Intel deal is further-reaching: the U.S. is taking a ten percent ownership stake in what was once the world’s leading chipmaker.
Countries that have done things like this are largely authoritarian — Mussolini’s Italy in the West, or Singapore in Asia. Here to discuss how these deals might work in practice and what they portend for our system of government, we’re joined by Louise Matsakis, senior business editor at Wired. Welcome.
Louise Matsakis: Hey. It’s great to be here.
Alexis Madrigal: We’ve also got Tad DeHaven, policy analyst for federal and state economic and fiscal policy issues at the Cato Institute, a think tank. Welcome.
Tad DeHaven: Thanks for having me on.
Alexis Madrigal: And Nils Gilman, chief operating officer and executive vice president at the Berggruen Institute, and deputy editor of Noema magazine. Thanks for joining us, Nils.
Nils Gilman: Thank you so much.
Alexis Madrigal: So, Louise, let’s start with you. I gave the one-liner on Intel, but what do we really know about this deal? How it came about? What are the details?
Louise Matsakis: We know very little because a lot of these deals are, frankly, handshakes between very rich men. But one thing that’s important to understand is that a lot of what’s going on here is actually the appropriation — and distortion — of a bill passed by Congress: the CHIPS Act.
That was one of the signature pieces of legislation of the Biden administration, a large industrial policy package meant to boost semiconductor manufacturing in the U.S. It included about $50 billion in research and development grants to companies like Nvidia, Intel, and TSMC to build more U.S. manufacturing.
What’s happening now is that funding is coming with new conditions. The Trump administration has essentially said: you got this funding under the CHIPS Act, which already had strings attached, but now if you want to continue accessing it, we want a ten percent stake in the company.
Alexis Madrigal: Yeah. The CHIPS Act was industrial policy — the support of a strategic industry. What was it responding to?
Louise Matsakis: Primarily the pandemic. During the height of COVID lockdowns, there was this ugly realization in Washington: we’re more vulnerable than we thought. If a war broke out, or in this case a health emergency, we couldn’t make a lot of critical things needed to run the economy.
People remember shortages of masks, toilet paper, furniture. But what really concerned national security experts was access to semiconductors and chips — the backbone of modern life: smartphones, cars, weapons systems. While much of the intellectual property remains in the U.S., manufacturing has moved abroad, especially to South Korea and Taiwan, where TSMC makes the world’s most advanced chips.
So there was growing concern that if something like COVID happened again, or if China invaded Taiwan, the U.S. wouldn’t be able to produce those chips.
Alexis Madrigal: Yeah. Nils, given your background as a historian, talk about how the U.S. has intervened to boost industries and companies over time. This isn’t unprecedented, but it does feel different.
Nils Gilman: A couple of things stand out. First, historically, federal intervention has taken different forms. During the New Deal, the Reconstruction Finance Corporation took stakes in more than 7,000 failing banks. In the 1980s savings and loan crisis, Reagan’s Republican administration intervened. And most recently, during the 2008 financial crisis, the Troubled Asset Relief Program (TARP) allowed the government to take significant stakes in “too big to fail” companies — financial institutions like AIG, and automakers the Obama administration didn’t want to see collapse.
The difference now is that those earlier cases came in moments of acute crisis. Intel has struggled and lost market share for decades, but we’re not in a solvency crisis. Second, the Trump administration — particularly Kevin Hassett, chairman of the Council of Economic Advisers — is talking about doing this more broadly, using it to build what they’re calling a sovereign wealth fund for the U.S.
This would mean taking strategic long-term positions so taxpayers get a share of the wealth these companies generate. Other countries do this — usually resource-heavy ones like Norway or the UAE.
Alexis Madrigal: Pump oil, take a cut, reinvest the money.
Nils Gilman: Exactly. The idea is similar — building up a portfolio of assets — but here it’s actual government ownership of percentages of major firms. That’s what makes this moment stand out.
Alexis Madrigal: Tad, I imagine given Cato’s libertarian leanings, this is something you hate.
Tad DeHaven: It’s borderline surreal. Pandora’s box is open. We’re in uncharted territory — though you could say that about much of the first six months of Trump’s second term.
There’s been a rush to label this corporatism, socialism, all kinds of “isms.” But Trump isn’t guided by ideology. Outside of thinking “trade is bad,” it’s transactional: tariffs one day, lifted the next, wheeling and dealing. There’s no strategy, no philosophy.
In his first term, there were some adults in the room. Now, it’s errand boys — the gang that can’t shoot straight — bouncing from one idea to the next to please the boss.
Alexis Madrigal: One of our listeners, Rhishi on Discord, is on the same wavelength. He writes: Let’s leave labels like socialism or oligarchy aside. Most Americans don’t understand them. AI companies got no regulation. Apple got tariff relief. Nvidia and AMD got export passes for a fee. Intel sort of got bailed out. Tesla, SpaceX, and X came close until Trump’s spat with Musk. What does small business get? What does the average consumer get?
I think that echoes your point, Tad, and yours, Louise — these are handshake deals. This isn’t normally how policymaking is done.
Tad DeHaven: No. But the way Trump operates is: who’s going to stop me? He pushes boundaries until someone says no.
The judiciary might push back on “emergency tariffs.” But Congress? With its Republican majority — a mix of true believers and those unwilling to speak up — it’s not likely.
For years, Republicans talked about free markets, accused Democrats of socialism. Kevin Hassett was appalled when Obama took stakes in Chrysler and GM. And now? It proves the GOP of Reagan is dead and buried.
Alexis Madrigal: We’re talking about the Trump administration’s recent agreement to take an equity stake in Intel. We’re joined by Tad DeHaven of the Cato Institute, Nils Gilman of the Berggruen Institute, and Louise Matsakis of Wired.
We know there are a lot of people with ties to Intel in this area — employees, shareholders, business partners. What do you think of the government’s action? Give us a call at 866-733-6786. Email forum@kqed.org.
I’m Alexis Madrigal. Stay tuned.
