Industrial Policy and Public Money

On 22 August 2025 Intel agreed to sell 433.3 million new shares to the United States government at $20.47 each, about $8.9 billion, which made the government the owner of about 9.9% of the company. No new money changed hands. The government paid with about $5.7 billion of grants that Intel had been awarded under the CHIPS Act but not yet received, and about $3.2 billion of funds from the Secure Enclave programme for defence chips. It also took a five-year warrant to buy another 5% at $20 a share, exercisable only if Intel ceased to own at least 51% of its foundry business. The stake was described as passive: no board seat, and an undertaking to vote generally with the board, with exceptions. At the same time Intel's CHIPS award was amended: the unachieved project milestones were removed, and each project was treated as complete once Intel had spent eligible costs equal to the award (company; Government Accountability Office description, reported). About $2.2 billion of grants had already been paid, which is why one framing put the total public investment at about $11.1 billion (reported).

Chapter 8 told what the stake meant for Intel's fabs in Arizona and Ohio. This chapter is about what it meant for industrial policy. The CHIPS award of $7.865 billion, finalised in November 2024, had been a grant paid in tranches against construction, tool-in and production milestones, with clawbacks if commitments were missed. Its conversion changed three things at once. Intel got certainty: money that might have been withheld as Ohio slipped became shares the government could not reopen. The government got the upside: SoftBank bought $2 billion of Intel shares at $23 in August 2025, Nvidia agreed on 18 September 2025 to buy about $5 billion at $23.28, closing on 26 December 2025, and by June 2026 the government's stake was reported to be worth about $56.5 billion (reported). And every other manufacturer negotiating public support learned that a final award was not a final deal and that the government's price for money not yet paid could be equity. It was, on one account, the largest US government equity stake in a major industrial company since the rescues of 2008–09 (reported).

This chapter explains the instruments of industrial policy, what each is worth and to whom, how the CHIPS programme and the tax credits changed in 2025–26, what states put at risk, and why the same lesson recurs in Ohio, Magdeburg and Wisconsin: a subsidy can lower the cost of capital, but it cannot supply a customer.