Commerce Secretary Howard Lutnick said Tuesday that the Trump administration is considering buying ownership stakes in major defense contractors, similar to its recent controversial move to acquire part of chipmaker Intel Corp. (NASDAQ:INTC).
Trump Administration Eyes Defense Contractors
During an interview on CNBC's Squawk Box, host Andrew Ross Sorkin asked why the government shouldn't take partial ownership of companies like Palantir Technologies, Inc. (NASDAQ:PLTR) or Boeing Co. (NYSE:BA), according to The Hill.
"There are a lot of businesses that do business with the U.S. government, that benefit by doing business with the U.S. government. Where, again, I guess the question is, where's the line?" Sorkin asked.
Lutnick responded by pointing to defense firms.
"Oh, there's a monstrous discussion about defense," Lutnick replied.
"I mean, Lockheed Martin makes 97 percent of their revenue from the U.S. government. They are basically an arm of the U.S. government. They make exquisite munitions, I mean, amazing things that can knock a missile out of the air when it's coming towards you," he added.
Shares of Lockheed Martin Corp. (NYSE:LMT) and other major defense contractors, including Northrop Grumman Corp. (NYSE:NOC), L3Harris Technologies, Inc. (NYSE:LHX), General Dynamics Corp. (NYSE:GD) and RTX Corp. (NYSE:RTX), were all up in Tuesday afternoon trading.
10% Stake In Intel
After markets closed on Friday, Intel revealed a deal with the Trump administration involving an $8.9 billion investment from the U.S. government to bolster America's technology and manufacturing base.
In exchange, the U.S. government now holds a 9.9% equity stake in Intel.
Intel CEO Lip-Bu Tan emphasized the company's leadership in advanced U.S. semiconductor research and manufacturing, stating that Intel remains committed to keeping the most sophisticated technologies domestically produced.
He credited President Donald Trump's push for strengthening chip production in the U.S. as a driver of unprecedented industry investment critical to both economic growth and national security.
Under the agreement, the government will acquire about 433.3 million Intel shares at $20.47 per share. The stake is structured as a passive holding, meaning the government will not seek board representation and will support the board's recommendations in shareholder votes.
In a company statement, Intel reiterated its commitment to advancing U.S. national and economic security, while also expressing eagerness to maintain close cooperation with the administration.
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