TLDRs;
- Treasury Secretary Bessent rules out Nvidia stake, citing strong financial position despite US equity move in Intel.
- Washington’s $11B Intel deal signals selective backing of weaker firms while leaving dominant market leaders independent.
- Analysts warn government equity stakes risk moral hazard, creating US “national champions” akin to China and Europe.
- Future government investment could target other struggling strategic sectors, including shipbuilding and defense-related industries.
The U.S. government has ruled out acquiring a stake in chipmaking giant Nvidia, despite intensifying involvement in companies it considers strategically vital to national interests.
Treasury Secretary Scott Bessent confirmed on Thursday, that Washington has no plans to extend direct financial support to the GPU leader, following the Trump administration’s historic $11 billion conversion of subsidies into an equity stake in Intel.
Speaking on Fox Business, Bessent emphasized that Nvidia’s dominant market position makes government intervention unnecessary. “Nvidia does not require financial support. The company is thriving,” he said, adding that other industries, including shipbuilding, could become the focus of future federal investment.
The announcement comes just days after the White House confirmed its transformation of federal subsidies into a nearly 10% ownership in Intel, making the government the single largest shareholder of the once-dominant chipmaker. The move was widely seen as a bold pivot in U.S. industrial policy, signaling Washington’s readiness to take direct equity positions in companies deemed too important to fail.
Historical Roots of Semiconductor Intervention
The Intel deal, while controversial, reflects a familiar pattern in U.S. history. Government support has long underpinned the semiconductor industry, despite decades of political rhetoric championing free markets.
In the 1960s, federal agencies like NASA and the U.S. Air Force were early and reliable customers for integrated circuits, enabling firms such as Texas Instruments and Fairchild Semiconductor to scale production and cut costs.
Later, between 1976 and 1995, federal research funding for computer science surged from $65 million to $350 million, creating a talent pipeline that would fuel the rise of Silicon Valley. Analysts argue the Intel stake is less a break with tradition than a continuation of Washington’s role in ensuring strategic industries remain competitive, particularly when private capital retreats.
Why Intel, Not Nvidia?
Analysts see Bessent’s remarks as evidence of a “winner-picking” strategy. Both Intel and Nvidia are critical players in the semiconductor ecosystem, particularly for artificial intelligence applications. However, their market trajectories differ dramatically.
Nvidia holds a staggering 92% share of the GPU market and has seen its stock rise 871% since the launch of ChatGPT, cementing its position as a global technology leader. Intel, on the other hand, has struggled. Its shares have lost nearly half their value since 2020, weighed down by competitive missteps and delays in advanced chipmaking.
Concerns Over Market Intervention
Not everyone welcomes the government’s growing presence in public companies. Some investors warn that the Intel precedent could open the door to deeper state involvement in private markets, potentially distorting competition.
Critics argue that selective bailouts create moral hazard, encouraging weaker firms to expect rescue while stronger companies face the risk of future political pressure or even state control.
For now, Nvidia appears safe from government influence, but the broader trend of intervention is unmistakable. If Washington continues expanding its role, the balance between free-market competition and state-driven industrial policy may shift in ways unseen since the Cold War.
