Former Treasury Secretary Larry Summers expressed skepticism over the US government’s decision to take a 10% equity stake in Intel (INTC), warning that the move reflects a troubling shift in how economic policy is being carried out.
The stake comes as Washington steps up efforts to boost the domestic semiconductor industry. While Summers acknowledged the logic of public funds supporting struggling companies, he cautioned that the Intel deal fits into a broader — and, in his view, problematic — pattern.
“It comes as part of a general approach to [economic] policy, what you might call deals-based capitalism rather than rules-based … capitalism,” he said.
Summers argued that a rules-based approach, where companies compete under consistent standards rather than striking case-by-case deals with regulators, is more conducive to long-term growth and market stability.
Recent government interventions raise questions about fairness, consistency, and long-term market impacts, Summer noted. These examples include the government taking a stake in US Steel in exchange for regulatory approval, as well as agreements with law firms after threats that they would lose access to federal buildings.
The Intel move touches off a larger debate about the government’s role in shaping the future of critical industries like semiconductors and artificial intelligence.
The company has faced years of execution challenges, ceding market share to Taiwan Semiconductor Manufacturing Company (TSMC) and Advanced Micro Devices (AMD). Its turnaround efforts have required heavy government support, including subsidies from the CHIPs and Science Act.
Summers, who also serves on the board of directors of OpenAI (OPAI.PVT), said he doesn’t want to prejudge the details of the Intel deal “without understanding things better,” but he did stress the risks of blurring the line between market competition and political negotiation.
For investors, uncertainty grows when policy decisions in Washington increasingly shape the future of US tech companies. That has been the case for Nvidia (NVDA) and AMD. The two companies are in a revenue-sharing arrangement with the US government, where they are required to pay 15% of their revenue from specific AI chip sales to China to secure export licenses.
Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at francisco.velasquez@yahooinc.com.
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