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“During the 2007-09 recession, Washington injected funds into banks and car companies. Just as their survival was a 'national security and livelihood issue, so is the ability to produce chips,' said Goodrich.”
“This represents a reasonable rationale for the Trump administration’s 9.9% stake in Intel. And yet that isn’t the rationale Trump has advanced. His motive seems to be, simply, money. As he declared on social media this past week: 'I PAID ZERO FOR INTEL, IT IS WORTH APPROXIMATELY 11 BILLION DOLLARS.'”
Details revealed in the article are troubling. 1. Shares distributed to government will diluted existing shareholder’s value. 2. May impose other companies to use Intel foundry business even though Intel chips may not able to produce chips with the equivalent performance specifications. 3. This practice may spread to other industries. Lockheed, a leading defense contractor, was mentioned. 4. Similar to China approach to state-run industry.
One concern has been what if the Gov provide all this "assistance" to INTC for its chip foundries & then INTC just sells majority stake or all of its foundries.
After all, INTC efforts to become contract manufacturer for others failed miserably. It was actually worse - INTC setup contract manufacturing production, but customers didn't come, so lot of that capex went down the drain.
Previous Administration's approach was to slow the release of promised "grants", demand to see actual customer orders, put restrictions on any foundry sales, etc.
This Administration has a different approach - convert "grants" into equity stakes. But it has released all of the promised money to INTC (to lose or profit) and got 9.99% stake for now.
One overlooked provision of this new deal is that if INTC sells majority stake or all of its chip foundries (where the Gov "assistance" is going), the Gov will get ADDITIONAL 5% stake. So, the Gov may end up with 9.99-14.99% stake in INTC.
My first thought: congress members will have to look elsewhere to find insider trades.
Every level of government can be accused of picking winners and losers with other people's money.
History continues to judge the value of presidential initiatives: Eisenhower's highway system Hoover's Dam T. Roosevelt's National Parks F. Roosevelt's Social Security Program Nixon's US/China Trade Agreement Nixon Ending Breton Woods Agreement Busch's (Cheney's) Wars Obama's Obamacare Biden's Green New Deal
It is the other-people's-money that bothers me most about this (and some other things that are going on).
As in the fact that this plan (admittedly a poor word choice) is being executed by a 34 count felon with a background of six applications for bankruptcy protection? What could possibly go wrong?
Comments
1. Shares distributed to government will diluted existing shareholder’s value.
2. May impose other companies to use Intel foundry business even though Intel chips may not able to produce chips with the equivalent performance specifications.
3. This practice may spread to other industries. Lockheed, a leading defense contractor, was mentioned.
4. Similar to China approach to state-run industry.
After all, INTC efforts to become contract manufacturer for others failed miserably. It was actually worse - INTC setup contract manufacturing production, but customers didn't come, so lot of that capex went down the drain.
Previous Administration's approach was to slow the release of promised "grants", demand to see actual customer orders, put restrictions on any foundry sales, etc.
This Administration has a different approach - convert "grants" into equity stakes. But it has released all of the promised money to INTC (to lose or profit) and got 9.99% stake for now.
One overlooked provision of this new deal is that if INTC sells majority stake or all of its chip foundries (where the Gov "assistance" is going), the Gov will get ADDITIONAL 5% stake. So, the Gov may end up with 9.99-14.99% stake in INTC.
Every level of government can be accused of picking winners and losers with other people's money.
History continues to judge the value of presidential initiatives:
Eisenhower's highway system
Hoover's Dam
T. Roosevelt's National Parks
F. Roosevelt's Social Security Program
Nixon's US/China Trade Agreement
Nixon Ending Breton Woods Agreement
Busch's (Cheney's) Wars
Obama's Obamacare
Biden's Green New Deal
History will judge Trump's initiatives.
My point is we will continue to judge these presidential initiatives, both past and present, into the future.