The U.S. sovereign fund is "quietly taking shape." After Intel, who is Trump's next target?

U.S. President Trump is "taking over" American businesses, with a series of equity investment actions by his administration quietly shaping a U.S. sovereign wealth fund.

On August 22, last Friday, the Trump administration confirmed it would acquire 9.9% of shares in chip giant Intel, in exchange for which the government will accelerate the disbursement of $9 billion in grant funding promised under the 2022 CHIPS and Science Act.

Intel is just the latest case of equity in exchange for U.S. CHIPS Act subsidies. The market widely speculates that other subsidized chip companies, such as Micron Tech, Texas Instruments, Applied Materials, and GlobalFoundries, may also face similar "equity for cash" demands in the future.

Media reports indicate that this landmark event is not an isolated case but the beginning of a series of equity investment plans by the U.S. government. White House officials have made it clear that more similar transactions will occur in the future, suggesting that a non-traditional form of U.S. sovereign wealth fund may be taking shape.

On August 25, Monday, Kevin Hassett, director of the Trump National Economic Council, told the media: "I am confident that at some point there will be more transactions, whether in this industry or in others."

This statement almost confirms that the government will continue to expand its equity footprint in the private sector, with the question no longer being "whether there will be more," but "who is next."

"Invisible" Sovereign Wealth Fund Taking Shape

Before investing in Intel, the government's investment reach had already extended to other strategic areas. Last month, the U.S. Department of Defense spent $400 million to acquire 15% of MP Materials, the only domestic supplier of rare earth magnets in the U.S.

Additionally, the U.S. government has required Nvidia and AMD to hand over 15% of their chip sales in China and has obtained a "golden share" in U.S. Steel, granting it veto power over certain decisions made by the acquirer, Japan's Nippon Steel.

These scattered investment actions are converging into a substantive sovereign wealth fund.

Salar Ghahramani, a professor of business law at Pennsylvania State University who studies such entities, noted: "This is essentially a sovereign wealth fund."

Unlike the centrally managed funds established by countries like Norway and Singapore using oil revenues or trade surpluses, Ghahramani believes that the Trump administration's investments are carried out by a "consortium of different agencies." He speculates that these scattered assets may eventually be integrated into a more traditional fund framework. In fact, the White House released a plan for establishing a sovereign wealth fund earlier this year.

Controversy and Concerns: "The Best Time for a Bad Idea"?

However, the government-led investment model has raised alarms in academia. Bill Megginson, a finance professor at the Price College of Business at the University of Oklahoma, described it as "a bad idea whose time may have come."

Professor Megginson's core argument is that traditional sovereign funds typically arise in countries with large cash surpluses, such as Norway and Kuwait, while the U.S. currently faces a fiscal deficit rather than a surplus In addition, the United States has a highly developed venture capital industry and a deep financial market, and whether the government needs to intervene personally is open to discussion. He raised two major concerns: "How transparent will this de facto U.S. sovereign fund be? And how politicized will it become?"

The government's equity stake is not purely a financial investment; its additional terms could profoundly impact the future of the company. According to the 8-K filing submitted by Intel, while the U.S. Department of Commerce agreed to vote in alignment with the company's board of directors at the shareholder meeting, there is a key exception clause: when a decision may "negatively impact the company's or its subsidiaries' relationship with the U.S. government," the government will not be bound by this.

This clause effectively reserves the government’s final veto power. Bernstein analyst Stacy A. Rasgon expressed concern about this. In a report on Monday, he wrote that if Intel decides in the future to divest its struggling chip manufacturing plants—a strategic move he believes the company urgently needs—the government is likely to intervene and obstruct it