The government’s stake in Intel is part of a broader strategy to create a sovereign wealth fund that could include more companies, White House economic advisor Kevin Hassett said Monday.
In a deal that marked a further incursion of federal involvement with private companies, the White House on Friday announced that it was taking a 10% share of the chipmaking giant. The move is worth some $8.9 billion, some of which will come from grant funding associated with the CHIPS Act while the rest will be under separate government allocations for programs associated with making secure chips.
While stressing that the government won’t involve itself in company operations, Hassett said the move is part of a broader strategy.
“Well, I think this is a very, very special circumstance because of the massive amount of chips act spending that was coming in,” Hassett, the director of the National Economic Council, said in an interview on CNBC’s “Squawk Box.” “But the President has made it clear all the way back to the campaign, he thinks that in the end, it would be great if the U.S. could start to build up a sovereign wealth fund. So I’m sure that at some point there’ll be more transactions, if not in this industry then other industries.
Trump signed an order in early February to start a sovereign wealth fund, a mechanism primarily used by smaller countries with vast natural resources that are used as funding backstops for transactions. Norway leads the world in such funds with some $1.8 trillion in assets, according to the Sovereign Wealth Fund Institute. China is next, and multiple Middle East nations also have large funds.
Though the U.S. government taking large positions in corporations is unusual it is not unheard of, said Hassett, citing the stakes in Fannie Mae and Freddie Mac following the financial crisis.
“We’re absolutely not in the in the business of picking winners and losers,” he said. “But this is not a thing that is unprecedented.”
Hassett added that the move is part of a larger strategy that includes tariffs to encourage more companies to onshore their production.
