Treasury Secretary Scott Bessent explained that the Trump administration prioritizes building assets for Americans over accumulating debt, outlining the rationale for the government acquiring stakes in private companies.
Stakes In Key Industries Ensure National Security, Boost Self-Sufficiency
Bessent, in a recent interview with Fox Business, stated that Trump, with his business acumen, formulated this strategy, which includes exploring the potential for the American taxpayer to participate in the upside of grants given to companies like Intel Corporation (NASDAQ:INTC). The Treasury Secretary noted an immediate value of $11 billion because of this, which could potentially increase.
Emphasizing the strategic importance of chips for the U.S., a lesson learned from the COVID-19 pandemic, Bessent identified five to seven strategic vulnerabilities in critical industries. The President aims to de-risk these areas, offering significant upside for taxpayers.
When asked about the possibility of the President taking a stake in NVIDIA Corporation (NASDAQ:NVDA), Bessent stated that it seems unlikely, as NVIDIA doesn’t require financial support. “That seems not on the table right now,” he said.
However, Bessent didn’t rule out the possibility of reshaping other critical industries like shipbuilding. He also pointed out the potential national security risk posed by the fact that 99% of advanced chips worldwide are manufactured in Taiwan. “That’s a national security risk like we haven’t seen since the Arab oil embargo,” Bessent added.
Notably, Nvidia and Advanced Micro Devices (NASDAQ:AMD) have agreed to give 15% of their China chip sales to the U.S. government to secure export licenses for their advanced AI chips, H20 and MI308.
Trump's Stake Plan Sparks Market Gains, Caution Ahead
Earlier in August, President Trump announced a 10% stake in Intel, a move that saw the company’s stock rise by over 6%. This was followed by the administration’s consideration of buying stakes in major defense contractors, a move that saw defense stocks rise on Tuesday.
Despite the initial positive market reactions, some experts have issued warnings. Jamie Cox, Managing Partner for Harris Financial Group, stated that the U.S. acquired stakes in major banks during the global financial crisis, and those stocks remained stagnant for a decade. Cox added that any company giving up a stake to the government today should proceed with caution.
However, Sen. Bernie Sanders (I-VT) backed Trump’s plan to convert U.S. grants to chipmakers into government equity in these firms. He believes that taxpayers shouldn't be giving billions in corporate welfare to large, profitable companies like Intel without receiving any benefit in return.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
