US Commerce Secretary Howard Lutnick has stated that the US government may effectively start purchasing more stakes in large companies, especially defence contractors that depend on government contracts in order to increase government expenditure efficiency. Secretary Lutnick mentioned Lockheed-Martin as a next potential purchase following the US government’s purchase of 10% of Intel.
Intel is the United States’ major chip manufacturer and is struggling to keep up with major foreign competitors like TSMC and NVIDIA which have become much larger and significant in the chip and semiconductor industry. In 2024 Intel made its first annual loss since 1986 of up to $18.8 billion. The 10% government purchase at around $8.9 billion was made to secure national supply chains, national security and to reverse the trend of a decaying major US national champion.
When asked whether this was socialism, the Commerce Secretary denied this.
This is not the first time that the US government has purchases shares in its struggling champions. In 2008, the US took a 60% stake in General Motors but sold the stake at a loss in 2013. In 2008, the US government also acquired ownership of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation).
However, the current Commerce Secretary is saying that incoming government investments in US companies may be made for strategic and economic interests rather than to save any company in particular.
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