Photo: William W. Potter/Adobe Stock
The Trump administration’s decision to support Intel as a national champion in chipmaking is a recognition of an economic security reality: Industrial policy has become the norm across advanced economies. Around the world, governments provide extensive support—through subsidies, tax incentives, and direct investment—to ensure their firms can meet the immense technical and financial challenges of producing advanced semiconductors. Intel, now at a critical juncture in its push to manufacture leading-edge semiconductors domestically, requires an infusion of capital to remain competitive.
Given the critical role of semiconductors in the modern economy, supporting Intel today is not about protecting one company for its own sake. It is about securing the industrial base necessary for national security in an era of geopolitical competition. The alternative—a U.S. future dependent on foreign sources for the most advanced chips—is strategically untenable.
The specific terms of support will matter. What governance rights will accompany federal funding? How much autonomy will Intel retain in commercial decisions? Will this set a precedent for future grants? Yet the strategic point remains: If the United States relies solely on market forces, it risks ceding leadership in one of the world’s most important industries. The United States needs Intel, and Intel needs U.S. support.
The short answer is yes. Intel should be thought of as part of the infrastructure that underpins U.S. technological leadership. Over the course of decades, Intel has developed a deep network of knowledge, resources, and relationships that underpin its ability to produce extremely complex and sensitive technologies crucial to many aspects of the U.S. economy, as well as U.S. national defense. This complex network with a capable U.S. firm at its core took many years to grow and is of major strategic value. Especially given its scale, Intel plays a key role in sustaining the industrial commons that anchor the activities of other semiconductor companies in the United States.
Without Intel and the complex industrial networks attached to it, the U.S. semiconductor manufacturing ecosystem—and by extension U.S. national security—would be gravely weakened. The United States has the world’s leading chip design firms in Nvidia, Qualcomm, and Advanced Micro Devices, Inc. (AMD), but most of their chips are manufactured elsewhere. Importantly, the United States has no alternative U.S.-headquartered company capable of manufacturing at the leading edge. A diminished Intel would leave the United States dependent on foreign firms for its most advanced chips, undermining both economic competitiveness and defense readiness.
The challenge Intel faces is stark: It needs commercial demand for its products to be viable, but it needs viability to secure demand. Building the world’s most advanced semiconductors—at four nanometers and below—is among the most technically difficult and capital-intensive undertakings in modern industry. Success requires massive upfront investment, long lead times, and customer confidence that the firm can deliver competitive chips.
From a national perspective, continued reliance on Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung—even with new fabs on U.S. soil—involves risks, particularly if sensitive military technologies are involved. Samsung has recently experienced difficulties in producing at the leading edge, while TSMC is vulnerable to geological trauma and potential geopolitical shocks, including conflict in the Taiwan Strait. This exposes the United States to supply chain risks that we can at least partially avoid. The Covid-19 pandemic revealed just how disruptive chip shortages can be; a geopolitical crisis would be far worse. By contrast, having an assured supply of advanced chips from a company able to contribute as a trusted supplier here in the United States offers clear security advantages both in production and supply.
The idea that Intel should succeed or fail based on market forces alone ignores the reality of modern global competition. Semiconductors are one of the most heavily subsidized industries in the world. Rivals abroad benefit from extensive government backing: SK Hynix in South Korea survived major downturns only because of state-supported debt restructuring, while China pours tens of billions of dollars annually into its domestic champions, shielding them from commercial risk and encouraging the purchase of their products by domestic firms.
State-backed initiatives are not guaranteed to succeed, and even when they do, they often do not allocate capital efficiently. Yet, they warp markets in ways that disadvantage firms competing solely on profit. China’s experience is telling: Failed projects are often replaced by new ones, with the government prepared to bear losses that would bankrupt any private company. This combination of persistence and scale makes state-backed competition formidable.
As a result, Intel does not compete on the proverbial “level playing field.” Rather, it is in a deeply uneven contest, competing against foreign firms backed by massive national support at the cutting edge of technology. Faced with this situation, the lesson from Asia is clear: When firms of strategic importance struggle, governments step in—not with unlimited subsidies, but with targeted support that gives them time to restructure and regain competitiveness. And they do so because they understand the long-term stakes in terms of national technological competency.
This does not mean the United States should write Intel a blank check. But neither should it leave the firm to weather structural disadvantages created by other nations’ industrial policies on its own. Smart policy can help restore confidence among customers, investors, and suppliers. This could include equity investments to bridge near-term financing needs, extending and enlarging targeted investment tax credits, providing loan guarantees to ensure continuity of investment, and encouraging the big design firms to invest in Intel and commit to long-term contracts to stabilize both finance and demand.
The United States has done this before. In the 1980s, government support for SEMATECH (and effective trade policies) played a crucial role in restoring U.S. competitiveness in memory chips. During the 2008 financial crisis, federal support kept the U.S. auto industry afloat, stabilizing millions of jobs and ensuring the survival of critical manufacturing capabilities. In each case, government action was temporary but decisive, signaling confidence and attracting the private capital needed to strengthen the industrial ecosystem supporting a major strategic industry.
Intel as a company is not “too big to fail,” but as we have argued previously, it is—as a national champion—too good to lose. U.S. leadership in chip design remains strong, but without secure advanced manufacturing at home, it is incomplete. The United States’ defense, economy, and technological leadership all depend on access to the most advanced semiconductors from diverse and secure suppliers. Ensuring that access means supporting Intel in this challenging transition. If not, as recent reports indicate, Intel may be forced to sell its foundry business to foreign owners—an untenable security risk.
As always, the details matter. The goal is not for the U.S. government to control Intel, but to provide necessary capital at a pivotal moment in its push to manufacture leading-edge chips domestically. Any restructuring must strike a balance—supporting Intel while preserving its market autonomy, similar to past government backing for firms like Tesla through loan guarantees and procurement contracts. And for Intel to remain competitive in the long term, it needs to innovate. Customers choose TSMC because it provides the best service and best technology. The United States cannot force them to choose the lesser option.
The administration’s investment is also a strong signal to allies, competitors, and markets that the United States is serious about sustaining leadership in semiconductors. Taking Intel onto its balance sheet means the U.S. government is taking on risk. But the much bigger risk is letting Intel fail. Getting this right will determine whether the United States remains a global technology leader for decades to come.
Sujai Shivakumar is the director and senior fellow of Renewing American Innovation at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Charles Wessner is a senior adviser (non-resident) with Renewing American Innovation at CSIS. Chris Borges is an associate fellow with the Economics Program and Scholl Chair in International Business at CSIS.
Renewing American Innovation has been a recipient of financial support from Intel; however, no financial support was provided for this commentary, and its analysis and conclusions are solely those of the authors.
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