The U.S. defense and technology sectors are witnessing a seismic shift as the Trump administration pursues an unprecedented strategy: acquiring equity stakes in major private companies. This bold approach, signaled by Commerce Secretary Howard Lutnick and exemplified by the government’s recent 9.9% stake in Intel, is sparking fierce debate across Washington and Wall Street. With global defense spending soaring and the lines between public and private interests blurring, investors, politicians, and industry insiders are grappling with the risks and rewards of this new era.
Howard Lutnick, speaking on CNBC’s Squawk Box, was clear about the administration’s intent. He described government equity investments as a “strategic imperative” to maintain U.S. leadership in critical sectors, especially defense and technology. The Intel deal, which saw the government purchase shares at $20.47 each for a nearly 10% stake, is being touted as a model for future interventions. While the stake is passive—meaning no board seats or direct governance—the move signals a fundamental shift in the government’s relationship with industry. Lutnick didn’t mince words, calling Lockheed Martin “basically an arm of the U.S. government,” underscoring just how entwined these relationships have become.
For investors, this new reality is a double-edged sword. On one hand, government backing can mean more stable contracts and policy support. Companies like Lockheed Martin, Raytheon, and Northrop Grumman, already deeply embedded in Pentagon procurement, stand to benefit from even closer alignment with federal priorities. According to the Stockholm International Peace Research Institute, global defense spending reached a staggering $2.4 trillion in 2023, with the U.S. and Europe leading the charge. This surge has fueled a boom in mergers and acquisitions (M&A), particularly in cutting-edge fields like cybersecurity and artificial intelligence.
But the government’s growing role also introduces new risks. Critics warn that these equity stakes could stifle innovation and reduce corporate autonomy. The Nippon Steel-U.S. Steel deal, for example, included a “golden share” for the U.S. government—a mechanism that gives Washington veto power over critical decisions. This, say detractors, is a step toward state control that could undermine the very dynamism that made American industry dominant in the first place.
The Intel case is particularly instructive. The company has faced significant headwinds since 2024, posting a dismal financial report and struggling to meet the benchmarks required to unlock the full $8 billion in CHIPS Act funding awarded under the Biden administration. The new CEO, Lip-Bu Tan, found himself embroiled in controversy after Cadence, where he previously served as chief executive, admitted to selling products to banned Chinese entities. President Trump initially called for Tan’s resignation but later softened his stance after a White House meeting, ultimately supporting Intel’s proposals to the government. The result: a 9.9% federal stake in Intel, announced on August 27, 2025.
This move came on the heels of other high-profile deals. In mid-2025, AMD and Nvidia agreed to hand over 15% of their China revenue in exchange for export licenses for their H20 and MI308 chips. Meanwhile, the administration’s interest in acquiring stakes in Boeing and Palantir Technologies signals a broader strategy to consolidate control over supply chains deemed essential to national security.
Not everyone is on board. Several Republican senators, including North Carolina’s Thom Tillis and Kentucky’s Rand Paul, have blasted the Intel deal as a dangerous turn toward socialism. “State-owned enterprise is not the American way. Free enterprise is the American way,” former Vice President Mike Pence declared in an August 27 statement, echoing concerns voiced by former GOP Senator Jeff Flake, ex-Trump advisor Larry Kudlow, conservative economist Stephen Moore, and strategist Brian Darling. The National Review editorial board also weighed in, arguing that these moves betray the free-market principles of conservative icons like William F. Buckley and Ronald Reagan.
Some critics have gone so far as to compare the administration’s actions to the economic systems of China and Russia, where state control is the norm. “These deals make it feel like tech companies are becoming semi-state-owned enterprises,” said Senator Tillis, adding that the approach resembles the former Soviet Union more than the United States. Senator Paul was equally blunt, calling the Intel stake “a step towards socialism.”
President Trump, however, has been unapologetic. On his social media platform, he boasted, “I PAID ZERO FOR INTEL, IT IS WORTH APPROXIMATELY 11 BILLION DOLLARS. All goes to the USA. Why are ‘stupid’ people unhappy with that? I will make deals like that for our Country all day long.” For Trump, the calculus is simple: if taxpayer money is being used to support struggling giants like Intel—whose $50 billion-plus annual revenue and $108 billion investment in new U.S. fabrication plants over the past five years are well documented—then the public should get something tangible in return.
The debate has spilled into the investing community as well. Some argue that requiring equity in exchange for federal support is only fair, ending what they see as a long-running “scam” of corporate bailouts with no strings attached. Others worry that government involvement will lead to overregulation and political meddling that ultimately hurts shareholders. As one commentator put it, “Is issuing a massive new batch of Intel stock while the government steps in and gets their hands all up in Intel’s business actually a good thing for shareholders?”
Amid this uncertainty, investors are being urged to tread carefully. The playbook, according to industry analysts, is to prioritize companies with strong government ties, diversify across geopolitical and technological trends, and remain wary of potential regulatory overreach. With the Americas accounting for 61% of global M&A deal values in the defense sector in the first half of 2025, the opportunities are significant—but so are the risks.
As the Trump administration presses forward, the defense and tech industries stand at a crossroads. Lutnick’s comments and the flurry of recent deals suggest a future in which government and private sector interests are more intertwined than ever before. Whether this will lead to greater stability and innovation—or usher in a new era of state-dominated enterprise—remains to be seen. What’s certain is that the winners will be those who can navigate the delicate balance between profit, patriotism, and political power.
