Op-Ed: US gov’s Intel share buy is only the start

• The U.S. government’s purchase of a 10% stake in Intel is likely to be the first in a long series of such investments
• Historically, the government has avoided owning companies to prevent an Amtrak situation
• Why doesn’t the U.S. buy shares in some really good companies and generate even better returns for taxpayers?

Welcome to the new age of American state capitalism. The U.S. government’s purchase of a 10% stake in Intel Corp. is likely to be the first in a long series of such investments.

Historically, the government has avoided owning companies to prevent an Amtrak situation — being stuck with a sucky, unpopular, loss-making monopoly. But that doesn’t mean President Trump’s Intel move is bad business, especially for the taxpayers footing the bill, provided shares of Intel (NASDAQ: INTC) continue to rally. The odds are pretty good, given the government’s power to award Intel hundreds of billions in contracts — and its interest in doing so as a significant shareholder.

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But also, by missing the AI explosion through being distracted making huge amounts of money from its Xeon processors, Intel now stands a good chance of not getting splashed when the AI bubble inevitably bursts. Lucky tricksters!

Assuming a successful near-term result from its Intel dabble, a question arises: instead of buying shares in distressed assets like Intel, why doesn’t the U.S. buy shares in some really good companies and generate even better returns for taxpayers?

One reason is ideological. The other country that has successfully implemented this government share ownership model is China. Following suit makes for terrible optics.

Another reason is that stock investing is risky — yet, it’s far less risky for taxpayers than the hundreds of billions the U.S. government gives annually to defense and oil companies in handouts and tax credits, which result in guaranteed losses to the public purse and zero return on investment.

A state capitalism approach, where the U.S. acts as an investment fund for taxpayers, would have been impossible until now, but not under President Trump, especially if he can find a way to direct a little of that cheddar into his own pocket.

What else could the Trump admin buy? Here are five obvious picks:

1. Qualcomm (NASDAQ: QCOM): America’s last great hope for leadership in 5G and 6G chip technology, crucial for advancing secure, nationwide communication networks — under big threat from incumbents like Ericsson, Nokia and Huawei.
2. Cisco Systems (NASDAQ: CSCO): The most American of the American tech companies; its dominance in networking infrastructure and cybersecurity is critical for national security.
3. Ciena Corp. (NYSE: CIEN): A key provider of advanced optical networking equipment supporting the “Internet pipes” that US politicians love.
4. HPE (with Juniper Networks) (NYSE: HPE): Their combined expertise offers an AI-driven, comprehensive networking and data center solution to strengthen U.S. infrastructure. Good news: now led by former Juniper CEO Rami Rahim, who is excellent. Bad news: 90% of the combined business comes from HPE, which isn’t.
5. L3Harris Technologies (NYSE: LHX): Specializes in secure communications and defense electronics vital for government operations.

Disclosure: I may or may not own shares of Intel Corp. I wouldn’t know, because I don’t get involved in all that trading malarkey; the nice folks at JPMorgan take care of it for me under a discretionary account. (I do know for a fact that I don’t own Palantir because I told my bankers I didn’t want to go to Hell when I die, and they have promised me that you won’t find that particular death-cult meme stock in my portfolio).

In any case, the information in this op-ed is for informational purposes only and not to be used for trading in stocks, currencies, CFDs (Contracts for Difference), Forex, spread betting, futures, cryptocurrencies, unusual taxidermy or collectible spoons.

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Steve Saunders is a British-born communications analyst, investor and digital media entrepreneur with a career spanning decades.

Op-eds from industry experts, analysts or our editorial staff are opinion pieces that do not represent the opinions of Fierce Network.

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