Stakes in Intel, Profit Demand From NVIDIA: Trump Era Big Tech ‘Swadeshi’ Manoeuvres

Rise and Fall of Intel

No business, not even the most powerful, can withstand the test of time forever. The US government’s recent announcement to buy a 10% stake in chipmaker Intel for $8.9 billion illustrates this point. It’s one of the largest state interventions in a US company since the auto bailouts during the 2008 global financial crisis. It is intended to help Intel catch up with competitors and restore a crucial domestic supply chain for economic and national security.

Semiconductor chips, the building blocks of modern electronic devices, have literally built the foundation for the digital age. Intel’s history is deeply intertwined with these tiny devices. People who grew up with the ‘Intel Inside’ logo on their computers and laptops saw it as a household consumer brand, not a computer component. The latest turn of events at Intel is more than just a corporate struggle to adapt to market forces. This represents a crucial moment in the US’s efforts to control a key technology in today’s rapidly changing world.

The US government’s new investment adds to the $2.2 billion already allocated under the CHIPS and Science Act. Former President Joe Biden signed this legislation in 2022 to boost domestic semiconductor manufacturing by offering substantial federal subsidies and incentives for companies to establish R&D and fabrication plants within the US. However, the Trump administration has been critical about its efficacy. Commerce Secretary Howard Lutnick said in a CNBC interview that the Biden administration gave money to companies like Intel for free, but Trump wants equity in return.

Intel was founded in 1968 by semiconductor pioneers Robert Noyce, Gordon Moore, and Andy Grove. The company developed the first commercially available microprocessor as well as several other semiconductor-based components. The microprocessor significantly reduced the size of a computer’s central processing unit (CPU) while retaining computer power. This enabled small machines to perform complex calculations, ushering in the personal computer revolution. Initially, Intel appeared destined to dominate technological advances in this sector forever.

But its long-held dominance has declined rapidly in recent decades due to strategic mistakes and a failure to adapt to a rapidly changing market. Manufacturing delays gave competitors like TSMC and Samsung an advantage. It also missed two crucial opportunities: the mobile revolution and artificial intelligence, where NVIDIA and AMD became dominant players. NVIDIA, a relatively recent entrant in the semiconductor industry, is one of the largest tech companies in the world now, with a market capitalization of more than $4 trillion USD. AMD’s market capitalization is approximately $270 billion. And Intel’s is just a little above $100 billion.

This is how big companies become relics of the past. As Austrian political economist Joseph Schumpeter has long argued, capitalism is propelled by the “perennial gale of creative destruction.” So it remains to be seen how far the US government’s intervention will help Intel revive.

Statecraft, Corporate Affairs

The acquisition of a portion of Intel’s stake is part of a larger trend of the Trump administration’s interference in private US corporations’ operations. While other industries also have faced similar actions, the semiconductor industry has been the primary focus. These interventions differ from previous approaches that relied on financial incentives and subsidies, as seen in the CHIPS Act. New strategies include stricter sales restrictions, tariff increases, pressure to invest in US factories, and grant denials.

Recently, the US government made an unprecedented deal with chipmakers Nvidia and AMD. With this, the US government will receive 15% of their AI chip sales to China. Previously, the government had banned AI chip exports to China for national security reasons. The new agreement allows these companies to resume the sales of certain chips to China. The deal could bring in over $2 billion for the US government, but it faces criticism from various quarters. Some argue that if a technology poses a national security risk, it shouldn’t be sold, regardless of government revenue, as it undermines export control. Some legal experts are questioning the constitutional validity of this agreement too.

In another move, President Donald Trump proposed a 100% tariff on imported semiconductors and computer chips. Companies that have committed to or are building US manufacturing facilities, like Apple, TSMC, Samsung, and SK Hynix, are likely exempt. The aim is to reduce reliance on international supply chains. This could disrupt global supply chains, forcing major chipmakers to relocate production to the US to avoid high costs.

This announcement was made alongside Apple’s pledge to invest an additional $100 billion in the United States. It was done following pressure from the Trump administration to increase its manufacturing in the country. This pressure intensified as Apple diversified its supply chain, including shifting iPhone production to India, which Trump opposes. A few months ago, he publicly criticized Apple CEO Tim Cook over the company’s Indian production, threatening tariffs on imported goods.

In recent months, the government has intervened in other industries critical to national security also. Nippon Steel’s $14.9 billion acquisition of U.S. Steel is one such example. The acquisition, announced in December 2023, drew criticism from the United Steelworkers union and the Biden administration over national security concerns. Initially, President Trump also opposed it. However, he changed his mind after Nippon agreed to grant the US government a “golden share” and the authority to appoint a board member, giving the government unprecedented control over strategic decisions. Another example is the Pentagon’s investment in MP Materials, the largest US rare earth miner, which aims to reduce China’s dominant position in the rare earth magnet market.

More National than Transnational

State interventions like these are almost unheard of in the United States. Several critics have labelled this trend as “state capitalism,” “corporate statism,” and so on. But the reality is more nuanced:

The US has long promoted free market capitalism with minimal government intervention, claiming it’s the most effective way to promote prosperity, innovation, and individual liberty. But the pure free market is a myth. Nation-states and their interests still exist. A market, even a supposedly ‘free’ one, needs a legal and political framework to function.

Furthermore, despite the US-led globalization creating an interdependent global economy, nation-state governments continue to play crucial roles as key regulators, facilitators, and competitors within a highly integrated system. In recent years, government economic policies, including fiscal, monetary, and foreign policies, have become increasingly important. The 2008 financial crisis highlighted the crucial role of states in bailing out their financial systems, emphasizing their power and responsibility in a globalized market.

The role of national governments is becoming increasingly important as economic globalization is tested by significant economic changes. China’s rise as a powerful economic force, rapid growth in emerging economies, and the United States’ own economic weakness have all contributed to the global economy becoming fragmented. Self-contained local economies are not returning. But, as multiple power centers try to expand their influence at any cost, coercion becomes a dominant pattern in the economic relations of the nation.

The resulting trade and technology wars are economic conflicts in which countries impose tariffs, export restrictions, and other trade and technology barriers. Unlike traditional trade disputes, which focus on specific goods or sectors, these conflicts stem from a larger competition for technological and geopolitical dominance.

The US government’s intervention in technology infrastructure and other critical sectors is not intended to transform its economy into a Chinese-style state-controlled one. It simply demands greater loyalty from companies in these sectors, making them more national rather than transnational.

War Over Tech Stacks

One of the major characteristics of contemporary international conflicts is the focus on control of advanced technologies. This is because these technologies have emerged as one of the most important means of production and distribution of goods and services.

Digital technology has been the major facilitator of globalization. The term “digital” often conjures up images of virtual things like the World Wide Web and cloud platforms. However, this virtuality is built on top of a complex global physical network of data exchange and storage. Today’s ubiquitous digital world is actually a layered stack of technologies, including hardware computing and storage, networks for data communication, and finally software running on top of this physical base.

For decades, US-based technology companies held a virtual monopoly on the global digital technology stack. However, things began to change as China emerged as an economic and technological powerhouse, challenging the United States’ long-standing dominance. Governments are also becoming more concerned with digital sovereignty and security, increasing the need for control over their own data, infrastructure, and technology. They want to prevent competitors from gaining military or economic advantages.

All of this is driving countries to seek greater self-sufficiency and ‘onshoring’ of production to reduce reliance on competitors. This is a new era characterized by protectionism, sanctions, supply chain attacks, and economic and technological coercion.

Countries are particularly concerned about the critical vulnerability in global supply chains of the bottommost material substrate of the tech stack. Things like chips and rare earth materials have become critical chokepoint technologies. The chip industry faces a complex manufacturing cycle and a vulnerable global supply chain that is extremely susceptible to wars, pandemics, and other uncertainties. Most new chips are designed in the US but manufactured and packaged in East Asia, with equipment sourced from other countries, including Europe. ​​

China’s export control measures on rare earth elements recently, which are crucial for high-performance magnets, disrupted supply chains in the US, Europe, and India. Though a temporary trade truce easing restrictions happened later, the underlying vulnerability remains, prompting the other countries to invest in domestic rare earth supply chains or seek alternate ones.

Initiatives to ensure control over the technological stack have become a strategic priority for not just the US and China. Other countries are also actively pursuing it. For example, the European Union proposed a EuroStack to build an independent European technology infrastructure to reduce its dependence on foreign, particularly American and Chinese, technology.

The Indian government has initiated India Stack, a suite of digital platforms, like Aadhaar and UPI, that enable presence-less, paperless, and cashless service delivery and commerce via ONDC (Open Network for Digital Commerce). In parallel, RBI is planning to launch the Indian Financial Services (IFS) Cloud in 2025-26 to promote data localization and enhance data security for financial institutions.

Big Tech’s Realignment

US big tech has long been regarded as a proponent of techno-libertarianism, an ideology that advocates for minimal government control over technology and digital spaces while allowing for unrestricted market expansion and individual liberty. However, confronted with the challenges of the state-led Chinese tech ecosystem, the EU’s rights-based regulatory environment, and increasingly hostile and suspicious authorities in other regions of the global market, they are quickly abandoning liberalism’s pretensions.

In an essay on the global economy and the nation-state written in 1997, renowned management consultant and author Peter Drucker made some interesting observations about the characteristics of multinational corporations in the era of globalization. He said that businesses are shifting from multinational to transnational structures, where the world is the economic unit. For these transnational companies, “national boundaries have largely become irrelevant,” even though they are not totally beyond the control of national governments.

Now as the globalization as we know it recedes, the process is being reversed. Multinational corporations are becoming more national rather than transnational. That is what is happening in the US tech sector. They recognize that the presence of a strong state is unavoidable and, in some cases, desirable. 

A report published by the China Strategy Group in 2021, led by former Google CEO Eric Schmidt, warned that the US’s technological leadership is at risk due to asymmetric competition that favors China. It also said that some degree of technological bifurcation with China is inevitable and is in the US interest.

In Trump’s second term, the transformation of the US technology sector is even more visible. Some of what this administration is doing is what it seeks: significant investment in data centers, chip fabrication, and electrical power required for energy-intensive technologies such as AI. It sees it as the foundation of the much-needed self-sufficient US technology stack. 

In some cases, it is letting go of inhibitions about doing things it has traditionally avoided, such as military involvement. Recently the New York Times reported that driven by political shifts, competition with China, and the use of advanced technologies in recent wars, companies like Meta, Google, and OpenAI are actively collaborating with the military.

When necessary, it also complies with uncomfortable government pressures, as seen in the recent experiences of Intel, NVIDIA, AMD, and Apple.

This it does with nationalistic fervor. The press release on Apple’s commitment of $100 billion investment quoted its COO, Sabih Khan, as saying, “We want America to lead in this critical industry, and we’re expanding our efforts to grow a silicon manufacturing ecosystem that will benefit innovators across America.” And company CEO Tim Cook announced these plans with an unusual gift that emphasizes Apple’s support for Trump’s ‘America First’ slogan: a custom-made glass plaque with a 24k gold base. The glass was made in Kentucky, the gold in Utah, and the plaque was designed by a former U.S. Marine who now works at Apple.

This is Big Tech in the ‘swadeshi’ mold, a la of the Trump variety !!