White House's Hassett says US could take stakes in other chip companies

White House economic adviser Kevin Hassett indicated the U.S. government may expand its strategy of taking equity stakes beyond Intel to other semiconductor companies or even different industries, citing the substantial CHIPS Act spending and a long-term vision for a U.S. sovereign wealth fund. This potential for increased government intervention follows a series of unusual deals under the current administration, raising concerns among critics about new categories of corporate risk.

Analysis

White House economic adviser Kevin Hassett has indicated a potential expansion of direct government intervention in the private sector, suggesting the federal government may take equity stakes in other semiconductor firms beyond its recent deal with Intel (INTC). This policy is justified by the significant subsidies allocated through the CHIPS Act and is positioned as a potential step toward a long-term goal of establishing a U.S. sovereign wealth fund. The statement specifically names Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing Co (TSM) as possible candidates for similar transactions, signaling a new dynamic for key industry players. This move is not isolated, but rather part of a pattern of unorthodox government involvement under the current administration, which includes the Pentagon's large stake in MP Materials (MP) and the acquisition of a "golden share" in the U.S. Steel (X) sale to Nippon Steel. For investors, this trend introduces a new category of corporate and political risk, as direct government ownership can influence corporate governance, strategic direction, and shareholder value in strategically important industries.

Key Decisions for Investors

• Investors in semiconductor firms, particularly recipients of CHIPS Act funding like Intel and potentially AMD, must now evaluate the dual impact of government investment, which offers capital support but also introduces governance risk and potential dilution.
• Companies operating in sectors deemed strategically critical, such as AI, critical minerals, and domestic manufacturing, should be reassessed for heightened political risk, as the government has demonstrated a willingness to take direct equity or exert significant influence.
• Monitor for any formal policy proposals regarding a U.S. sovereign wealth fund, as its creation would represent a fundamental shift in U.S. industrial policy and could systemically alter the investment landscape for numerous industries.
• Portfolio managers should consider the increased uncertainty for M&A activity in key sectors, as seen with the U.S. Steel deal, where government intervention can add regulatory hurdles and alter transaction outcomes.