Subscribe to our free newsletter today<\/a> to keep up to date with the latest manufacturing news.<\/p>\n\n\n\nCommerce Secretary Howard Lutnick has suggested that US defense contractors could be the next target of an unprecedented wave of government equity stakes. The statement, made during an interview earlier this week, follows a controversial decision by the Trump administration to convert $11.1 billion in federal funding into a 9.9 percent ownership stake in Intel.<\/p>\n\n\n\n
The comment is more than a passing idea. It signals a growing federal appetite for strategic control over industries previously considered off-limits to direct state participation. \u201cLockheed Martin makes 97 percent of their revenue from the US government,\u201d Lutnick said. \u201cThey are basically an arm of the US government.\u201d<\/p>\n\n\n\n
A financial shift in the US defense complex<\/h3>\n\n\n\n
This statement reflects a broader shift toward economic statecraft. Lutnick’s remarks echo those made by Treasury Secretary Scott Bessent, who told CNBC this week that further moves like the Intel stake could follow. Together, the officials paint a picture of an administration increasingly comfortable with partial ownership of private sector firms involved in critical infrastructure and national security.<\/p>\n\n\n\n
Industry analysts are already parsing the implications. Lockheed Martin, Northrop Grumman and other defense firms generate most of their income from federal contracts. Equity stakes would not signify a bailout, but rather a public claim on reliable profit streams. While unusual, the logic presented is that taxpayers should be entitled to returns on their investment, particularly when those firms operate almost exclusively with government funding.<\/p>\n\n\n\n
Critics, however, warn of an erosion of traditional boundaries between public capital and private enterprise. Vance Gunn, a former Office of Management and Budget official under Trump\u2019s first term, described the trend as \u201ccorporate socialism,\u201d where profits remain privatized but risk is absorbed by taxpayers.<\/p>\n\n\n\n
From chips to combat<\/h3>\n\n\n\n
The Intel acquisition is the clearest sign yet of a more aggressive federal industrial strategy. It arrives amid a series of related decisions: the government took a \u201cgolden share\u201d in US Steel following its sale to Japan\u2019s Nippon Steel, a 15 percent stake in rare earth miner MP Materials, and now claims 15 percent of chip sale revenue from Nvidia and AMD\u2019s exports to China.<\/p>\n\n\n\n
The Intel deal, however, is by far the most contentious. The company is undergoing a workforce reduction of more than 20,000, even as it accepts significant government support. Public backlash has spanned the political spectrum. Republican critics include former Vice President Mike Pence and Senator Thom Tillis, who warned of a creeping \u201csemi-state-owned enterprise\u201d model. Businessman Kevin O\u2019Leary, speaking on CNBC, stated bluntly: \u201cIntel should have been sold for car parts three years ago.\u201d<\/p>\n\n\n\n
On the other side, support for the move came from Vermont Senator Bernie Sanders. He argued that if companies receive billions in public funds, then the public deserves a stake in the outcome. \u201cThe taxpayers of America have a right to a reasonable return on that investment,\u201d he wrote on social media.<\/p>\n\n\n\n
Lutnick, too, framed the shift as an overdue correction to previous federal handouts. The CHIPS and Science Act, championed by the Biden administration, had provided Intel with significant subsidies without equity claims. \u201cIt was just a giveaway of money,\u201d he said.<\/p>\n\n\n\n
Public control and private risks<\/h3>\n\n\n\n
The broader implication is a federal strategy that seeks not just to influence but to co-own strategic firms. This, some suggest, may foreshadow the creation of a U.S. sovereign wealth fund. Daniel McCarthy, editor-at-large at the American Conservative, characterized it as a necessary evolution, not a break from capitalism. \u201cThis is about keeping the United States competitive with other nations in the 21st century,\u201d he wrote.<\/p>\n\n\n\n
Not everyone agrees. The National Review\u2019s editorial board wrote that a government $37 trillion in debt has no business playing investment banker. Meanwhile, Cato Institute\u2019s Scott Lincicome warned of subtle coercion, where companies might feel pressure to align with government priorities rather than market forces.<\/p>\n\n\n\n
Intel itself acknowledged the complications in a recent filing. The firm warned that foreign regulators might impose restrictions due to its new government ties. That risk is not abstract: 76 percent of Intel\u2019s revenue came from international markets last year, including 29 percent from China.<\/p>\n\n\n\n
At issue is more than ownership. With stakes in companies that produce vital technologies and military systems, the government is potentially reshaping procurement, pricing, and innovation ecosystems. Critics argue that investor signals may become less reliable. Others suggest the risks of politicization now mirror those in centralized economies that Washington has historically criticized.<\/p>\n\n\n\n
The shift in posture extends beyond policy. President Trump, after initially calling for Intel CEO Lip-Bu Tan\u2019s resignation over ties to Chinese firms, later met with him to finalize the deal. The reversal highlights the transactional nature of the administration\u2019s approach, where strategic alignment can override past political criticism.<\/p>\n\n\n\n
A government share in Intel may be just the beginning of a new chapter in American industrial policy.<\/p>\n\n\n\n
Sources<\/strong><\/p>\n\n\n\nCBC<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Commerce Secretary Howard Lutnick has suggested that U.S. defense contractors could be the next target of an unprecedented wave of government equity stakes. The statement, made during an interview earlier this week, follows a controversial decision by the Trump administration to convert $11.1 billion in federal funding into a 9.9 percent ownership stake in Intel.<\/p>\n","protected":false},"author":33,"featured_media":55114,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1962,1],"tags":[3906,3907,526],"class_list":["post-55113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-manufacturing-topics","category-news","tag-economic-policy","tag-industrial-strategy","tag-lockheed-martin"],"acf":[],"yoast_head":"\n
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