The nationalisation of Intel - socialism to protect capitalism

The Trump Administration is negotiating to buy a 10% stake in Intel Corp (Nasdaq: INTC) - in other words, a partial nationalisation of a powerful but struggling US semiconductor firm. When a government takes over a large stake in a corporation, it is often described as socialism, although in this case socialism is not for the working class in the form of housing or healthcare - but rather, the socialism is designed to protect private industries, or military-linked corporations that are critical to the functioning of the US empire. 

1. The irony of corporate socialism

In his writing about the 2008 financial crisis, the neo-Marxist philosopher, cultural theorist Slavoj Zizek has described: “if the government bailout plan is a socialist measure, then it is a particular form of socialism whose primary aim is not to help the poor, but the rich, not those who borrow, but those who lend. In a supreme irony, ‘socialising’ the banking system is acceptable when it serves to save capitalism. Socialism is bad - except when it serves to stabilise capitalism.” Noticeably, socialist leaning politicians like Bernie Sanders are coming out in support of this nationalisation plan. Ironically enough, right-wing politicians are the only people willing to “challenge” the neoliberal status quo and pass socialist policies. 

2. Context

Before the deal, Intel had spent tens of billions trying to regain its manufacturing lead from Taiwan Semiconductor Manufacturing (TSMC). Its foundry division disclosed an operating loss was approximately $7B, with courts dismissing a shareholder lawsuit over a $32B stock plunge. This demonstrates the scale of Intel’s financial constraint and its execution gap compared to industry leader TSMC, which continues to dominate advanced chip manufacturing. In August 2024, Intel announced more than 15000 job cuts and suspended dividend payments in a bid to save $10B annually, in which the market reacted harshly with shares plunging about 26% the following day. To increase liquidity and simplify its portfolio, Intel also sold a 51% stake in its programmable chip subsidiary Altera to a private equity firm. 

3. Base case, bull case, bear case

In terms of this bailout plan, the US government agrees to purchase 433.3 million primary shares of Intel common stock at the price of $20.47 per share, equivalent to a 9.9% stake in the company. In the base case, this partial nationalisation can help stabilise cash flow. The provided funding and political cover from the US government's 10% stake can ensure that Intel’s key fabrication plants in Arizona, Ohio and Oregon continue to move forward despite the execution struggles in the past. Although recovering profitability is challenging for Intel, this conversion of the 2022 Chips Act makes margin recoveries possible for the firm and thus prevents further deterioration. In this scenario, Intel remains a strategically significant U.S. semiconductor firm, though without fully closing the technological gap with TSMC and Samsung.

In the upside scenario, state involvement can reassure Intel’s investors and large commercial partners. For example, Nvidia’s recent $5B investment in Intel could pave the way for other US chip designers, including AMD, Qualcomm, or Apple to reallocate advanced packaging or manufacturing from TSMC to Intel's foundry lab. Such shifts could improve yield. In the downside case, Intel is unable to deliver technological improvements that are necessary to close the gap with leading competitors. If chip designers are effectively compelled (through policy pressure or incentives structure) to use Intel’s factories before it can reach a production yield that matches TSMC’s, it could lead to suboptimal products, and the US chip industry could lose competitiveness. In addition, the US government’s shareholder role raised questions about future voting practices that could weaken foreign chip designers' (such as European and Japanese companies) trust in leaving their intellectual property in Intel’s hands. In this scenario, nationalisation secures domestic defence and aerospace supply but does not restore Intel’s global competitiveness, leaving both taxpayers and private investors exposed to sustained underperformance.

4. Mainstream media criticism

The ‘free market advocates” that run the US mainstream media are mostly upset about the deal, with The Washington Post calling it “antithetical to American greatness”, and the Wall Street Journal calling it “a plan without strategy”. These legacy media outlets funded by capitalist icons such as Jeff Bezos are criticising this takeover of Intel’s equity - as it may serve, symbolically, that socialism is in the realm of possibility. This directly challenges the hard-wired narrative of the free market economy that has contributed to the concentration of market power and upward distribution of income in the US for decades. If this action from the Trump Administration shows effectiveness, the free market narrative could be challenged publicly, and pave the way for the American public to start demanding more public welfare (i.e. socialist policies) such as universal healthcare. In other words, this event is not only critical for the single corporation Intel, but it highlights one of the most classic debates in our modern economic system. 

Conclusion

In short, the 10% equity takeover could show effectiveness in securing domestic semiconductor capacity and preserving US defence supply chains, but its success in restoring Intel’s global competitiveness is far from guaranteed. Yet the political implications may be just as significant as the economic ones. As with the bank bailouts of 2008, the rescue of Intel underscores that “socialism” becomes politically palatable only when it stabilises the very system that normally rejects it. By taking equity in a flagship corporation, the U.S. government has broken with decades of orthodoxy that insisted on the primacy of private markets. If this “corporate socialism” is normalised, it could unsettle the ideological boundaries of American political economy and raise broader questions about whether similar state action should also extend to social welfare, not just corporate rescue. In this sense, the nationalisation of Intel is more than a bailout - it is a stress test of both American industrial policy and the narratives that sustain its capitalist order.