Trump Administration Said to Discuss Taking Stake in Intel

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1:02Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenevich. on Bloomberg Radio. We got to get back, though, to Intel. Yeah, shares for Intel finished up 7.4 % today, up 1.3 % in the after hours. This after Bloomberg reported exclusively that the Trump administration is said to discuss taking a stake in Intel.

1:48The U.S. government potentially taking a stake in the chip maker, which would help support the company's effort to expand domestic manufacturing. This is according to people familiar with the plan. I want to bring in Tom Giles. He's senior executive editor for Global Technology. Tom, can't stop talking about this story. Also, in the context of what happened earlier this week with NVIDIA and AMD, what's happened with MP Materials and the$400 million investment from the DoD, U.S. Steel as well. It really just feels like we're in a new era when it comes to industrial policy. What does it mean to you?

2:18You know, the Trump administration is doing some really unconventional things when it comes to trying to shape and influence industrial policy and U.S. corporations. Not a ton of precedence for this, at least not in the U.S. We've seen it in other types of economies where the government believes it's its role to shape industry and shape the direction of companies. That doesn't always end well. I'm a little surprised that the stock rallied as much as it did, to be totally honest with you. I think in the near term, investors are looking at, hey, look, this is a bit of money. Think of it maybe as a bailout for Intel.

3:02Help the company get its financial house in order and accelerate these plans to build a foundry in Ohio. On its face, all of that stuff sounds good. Go ahead. I'm glad you brought up the term bailout because I was talking to Carol about this. It kind of also feels reminiscent of, you know, we talk about the U.S. taking stakes in companies. It's not unprecedented during the financial crisis. We saw this happen with rescuing banks. We saw it happening with rescuing automakers. The question I have for you, and it really sticks to it doesn't always end well, is the concern about when you have investment from the U.S.

3:38government, the government picking winners and losers when it comes to a so-called, quote unquote, free market. that's not a really it's not a very free market this isn't the principles of capitalism hence the quotes that i that i studied um certainly in in macro and uh you know all the all the economics courses all the finance courses that i've taken um don't really this doesn't look like the capitalism that um we learned about growing up um what what this is is and there's a difference between a bailout per se and a government taking a financial stake this is about an ongoing relationship and again in the short term i see why the stock popped right it's seen as like hey intel could use could get help wherever you know wherever it can longer term do you really want the government are the government's interests aligned with those of shareholders the government might but might want to shape things for its own political interests but are those the interests It's the long-term interest of the shareholders of the company.

4:45I think that's a really good point. And I would also say, Tom, since we're talking about sort of the philosophical definition of capitalism right now, that one could maybe listen to our conversation or watch our conversation and say, wait a second. We've never really lived in a free market when local and federal subsidies power so much of this economy. I mean, you look at corn farming, for example, agriculture in the U.S. You look at subsidies that are given by states to lure businesses. We all remember what happened with Foxconn in Wisconsin, for example. That could be an entirely different conversation.

5:25But any any, you know, you name it. There are Boeing in South Carolina, for example, those sorts of things. There are different reasons that companies go places. Tax breaks all over the place. You know, the city of San Francisco just down the street incentivized Twitter to locate its headquarters right in central San Francisco. And they have lots of incentives. Think about the corporate tax cuts that we've seen in recent administrations. Those are all ways that the government is sort of giving financial incentives to these companies and incentivizing them to make investments in a city, in a state, in a county, for example.

6:06There's a difference between that and taking a long-term stake in a company. And remember, the thing that I'm not an authority on corn farming, but I do know Silicon Valley. And if you think about how the way things have run here, things have gone historically over decades, the precedent is company X in Silicon Valley, in the tech industry, says to D.C., stay out of our hair. Leave us alone, for the most part. We'll build, we'll create jobs. We'll build new and innovative technology that's going to change the way you live and work and the way we do business. And that has historically been the case.

6:50Government has had a relatively hands-off stance towards Silicon Valley, but that is changing dramatically and it's changing much more quickly under the Trump administration than it has in recent memory. As long as I can remember covering this industry, what are the long-term implications? I don't think people are really thinking about that right now. It's kind of mind-boggling. We're talking with Tom Giles, senior executive editor for Global Tech out there on the West Coast here in our Bloomberg Interactive Broker Studio. Ryan Gould just coming back into our studio. Bloomberg News deals reporter.

7:26He, along with Josh Wingrove and Leanna Baker, breaking this story. It is our most read on the Bloomberg. Tom, stay with us. Ryan, I want to roll you into this conversation. Remind everybody what you found out. And, you know, do we have any insight or do you guys have any insight about how much the Trump administration, which has been called an activist administration, would want to be involved on an ongoing basis if it made this investment? Carol, we have very few details as to the numbers. I mean, it's something we're obviously looking to find out at this point. But I think it's just worth recapping that just how novel this type of structure would be or could be.

8:03I think I came on here earlier on and said that there are very good parallels to be drawn between MP Materials and the DoD, that deal. I think if you just break that down, what did that mean for MP Materials and what could it mean for Intel? I mean, you look at that deal, it's something like, you know, guaranteed purchases, loans, private financing, equity investment. I think these are all types of things that the government perhaps feels. And again, this is what you would think from a sort of outside view looking in, that if you give confidence capital in this sense, which I think is a good way to think about what this would be for Intel shareholders.

8:36If you give confidence capital to Intel as the most creditworthy institution in the world coming in and saying, we're behind you, we're here for the long term. That's a massive draw, especially if you're Intel and you're looking to bring in customers like Apple or Qualcomm, which, by the way, has been its mission for a long, long time. to make its found be solvent. Tom, is that what Intel needs confidence capital? Is that what's going to be the turnaround key for this company that's been kind of struggling for a while? It has been struggling. I mean, you think about where they're lacking, right?

9:12They have fallen behind technologically, particularly in an age of AI. They have lost market share. Lip Bhutan, the CEO, has come in and he has been cutting jobs and taking some hard steps financially to shore up them from a financial perspective. But in terms of products, in terms of like making themselves attractive, making themselves the place that customers around the world want to come for their chip making needs, that's something where they've fallen desperately behind. And so if you have a foundry, I mean, on its face, the idea of building a foundry that's an alternative to TSMC, right, this Taiwan-based mammoth company that is making most of the most advanced chips in the world.

10:04Customers want an alternative to that. Ryan mentioned Apple. NVIDIA, they all would like to have alternatives to TSMC. you want you don't want someone to have a monopoly right so there are certain things about this idea of advancing this chip making capabilities for intel in ohio there's on it it makes sense um but it's really hard for a company that's struggling financially to get that off the ground so again getting back to that near-term equation it makes sense for them to get a capital infusion um yeah in the near term longer term does it make sense for the federal government to be making decisions and to be influencing the direction of companies.

10:44In many instances, the interests of the government and the shareholders may be very much aligned, but there will come a day where the government may want to politicize things in a way that doesn't work to the longer-term advantages of shareholders. That's the thing that people need to be asking hard questions about right now. Yeah, exactly. Tom Giles, so appreciative. Senior Executive Editor for Global Technology with his view and reporting there also on Intel. Intel shares still up about 2.8 % here in the aftermarket. I want to keep Ryan Gould in here as part of the team that broke the news that's still moving shares of Intel higher.

11:18Once again, more than 7 % to the upside. Earlier in the session, up another 2.9 % as we speak. Ryan, I want to go to you off of what Tom just said. The difficult questions that need to be asked right now. because you and the team write about the president and his administration are adamant about boosting domestic champions in sectors that it deems critical to combating China on national security grounds. I can imagine there are a lot of companies out there with executives who are raising their hands and saying, wait a second, I'm critical. Where's my money? Exactly. I think, Tim, you raise a good point, because if you're any other company that operates in semiconductor manufacturing or even semiconductor chip design.

12:02Hey, this isn't fair. Yeah. I mean, you would be looking on and thinking, what is the power play here? Yeah. I mean. And that's down 23 % following its latest quarterly update. I'm not saying anything is related, but it's like, hey, maybe I need an assist. And if you think back, let's just retrace those steps a little bit. Some of these challenges and some of these questions are being raised a couple of months ago, quite a few months ago now, before LipBootM became the CEO. You know, when Pat left, you know, there was a big search that went underway. They used a headhunter. They spoke to people like Gary Dickinson at AMET about the job.

12:33I mean, they spoke to a ton of people about the job. There is actually only one person who really wanted that job for the challenge that is on the table right now. And that is LeBoutin. LeBoutin is currently in that seat. He turned up at the White House earlier this week, kind of a fairly, you know, confident figure walking into the White House grounds. and is now on the face of this coming out with something that looks like a potentially very favorable deal, at least in the short term, I think, to Tom's point earlier on, at least in the short term for what, you know, Intel is looking to do, which is right size its balance sheet, stem some of those losses and make, sorry to use a Trump term, but, you know, make Intel great again.

13:12It's kind of wild, kind of wild. Before we get caught up in the exuberance that it's very easy to get caught up in this environment, especially when you've got a stock that pops 7 % in the regular trade, another 3 % here in the aftermarket. Early stages, like do you have any, you guys talked to a lot of folks, you reported this out, it's a Bloomberg exclusive, it's a most read story, but do you have a feeling of, again, I'm going to go back to kind of where this process may be? I mean, we actually don't, I mean, that's one of the challenges is, you know, finding out how big this is. I think, you know, we're on the case, I'm sure many of our competitors are now in the case.

13:48But I think one of the things I'd point out is that the president said on Truth Social this week that these meetings would be happening with commerce and with Treasury this week. You can probably assume that there are a ton of people down in Washington right now, both on the Intel side and the government side, who are putting minds together to figure out exactly what it will require to get Intel on a stronger footing. I think, you know, if you look at what Intel has said, it declined to comment, I should note, on the deal discussions. But it said in a statement to Bloomberg that it remains deeply committed to supporting Trump's efforts to strengthen U.S.

14:20technology and manufacturing leadership. Just quickly, we've not heard anything from the White House? Not yet. Okay, good to know. You rock again. Ryan Gould, deals reporter here at Bloomberg News. Again, Intel shares, Tim, up 2.6 % here in the aftermarket after about a 7 % gain in the regular trading session. Stay with us. More from Bloomberg Business Week Daily coming up after this.

14:47What if data didn't sit still? What if intelligence moved with us? Not buried in reports, but activated in real time. Where lives are being shaped. Where decisions are being made. It all starts with a question. Where is the potential? Coatality turns data into clarity. Intelligence into insight. Insight into action. Because when intelligence moves, we all move forward. Coatality. Intelligence beyond bounds. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app.

15:28Or watch us live on YouTube. Right now, though, we want to stay with what we just heard from the president, an array of topics. We've got with us our own Jenny Welch. She is with us, joining us from our bureau in the nation's capital. She is Bloomberg Economics Chief Geoeconomics Analyst. Jenny, good to have you back with us. There was a lot from the president. I'm always curious because he certainly says things that might be strewed as opinion or thoughts and speculation about things. What is it that from what we just heard from the president, anything in terms of new messaging that is something certainly the Bloomberg audience wants to know about?

16:04Well, I think in particular, as it relates to geopolitics and the summit taking place tomorrow between him and President Putin, that what especially European partners are likely paying attention to is the fact that he just once again tried to set expectations low for that meeting. But I think the new element was indicating he might be open to having European partners join some sort of subsequent summit that he hopes to be able to arrange between Putin and Ukrainian President Zelensky. I think we would say the odds of that coming together are rather low, given Putin's previous opposition to meeting with Zelensky.

16:35But nevertheless, that seems to be a goal that Trump is very much keen to get across the finish line in tomorrow's conversation with Putin. Jennifer, nobody has a crystal ball here, but we're thinking about possible and probable outcomes at this meeting. How are you thinking about these? What could end up happening post meeting tomorrow? We see three broad potential pathways for the meeting. As you noted, it's hard to say for sure. So we develop multiple scenarios and hope that one of them pans out. I think the first one and what we consider to be pretty unlikely is that talks collapse in such a calamitous way that Trump actually feels embarrassed and feels he needs to follow through on his previous threat of sanctions against Russia, which he's been lobbying since he returned to office in January, but hasn't actually taken any steps on.

17:20A second potential pathway is that they do make enough progress for Trump to declare victory of a sort and walk back those previous threats, which is probably his preference. But we remain rather skeptical that the two sides will be able to reach some sort of agreement that leads to lasting, sustainable peace. A key reason behind that is that Putin thinks time's on his side and that he's weaning on the battlefield. And so his incentives to negotiate are pretty low, which means the third possibility that they agree to something that will actually put them on the path towards a full peace deal with Ukraine, we see is still relatively low at this point in time.

17:54Is there any chance that there is no kind of peace deal worked out in a first or even second meeting that what ultimately happens is the U.S. steps up its efforts and support of Ukraine? I think there's certainly that possibility out there. And that's what Zelensky and many of the European partners are hoping that certainly that Trump doesn't make any agreements with Putin without them being there. And if he doesn't agree to anything with Putin, that will lead them to the negotiating table as sort of a unified force, that the very least he'll follow through on his threats to up the pressure on Russia while backing Ukraine stronger.

18:29I think my skepticism comes from we've been here multiple times since January and have yet to see Trump actually follow through on those threats. He certainly has a number of sanctions options at his disposal, but they all come with additional risks and costs, especially to the global oil market and to his relationships with other key countries, namely China, which is a major economic partner for Russia. It's hard not to think about tomorrow's meeting in the context of when we've seen these two leaders meet in the past. and Helsinki in the first term certainly comes to mind and everything that came along with that, Jennifer.

19:01What do we know about the relationship between these two leaders and what we could see, like, and from a negotiating perspective, from a behavioral perspective, from the way that we could see gifts to or from one another? Yeah, the relationship between these two leaders is of high interest, especially here domestically in the United States, subject to previous inquiries, and I think will continue to be subject to a lot of skepticism. They also have extremely different negotiating styles. Putin is a former KGB intelligence officer. That really shines through in how he approaches diplomacy, focusing on control, psychological manipulation, playing the long game as part of these talks.

19:40We've seen him, for example, before, play out international negotiations, pretending like he's interested in peace while continuing to make gains on the battlefield, most notably in Crimea in 2014 and 2015. With President Trump, he is a dealmaker. He comes from New York real estate. He's interested in creating some sort of win for himself, especially something that he can sell publicly. At the same time, he's someone who has shown he's willing to walk away from the table if he doesn't get what he wants. That was apparent in his first term with negotiations with North Korean leader Kim Jong-un.

20:13And I think that's something he's trying to sort of put down a marker for he's willing to do tomorrow. I think the question is, will Putin sort of outmatch him and outmaneuver him on that front and be able to provide him some sort of tangible win that Trump says is this is a victory or play into Trump's longstanding skepticism with Ukraine? We're living in interesting times. A headline just crossing the Bloomberg of a 5.2 mag earthquake, 132 kilometers southwest of Nikolsky, Alaska. So this is just crossing. It looks like probably from the U.S. Geological Service. So I'm just putting it out there because it all kind of is this big whiteboard and it all just connects, doesn't it?

20:52Hey, Jenny, one last question. You mentioned about, I think, you know, people moving ahead, forging agreements and so on and so forth. The president was asked specifically about Latin America and China getting closer and cozier. How are you looking at that, continuing to look at how things are changing when it comes to important global relationships? And is the U.S. increasingly being left out or no? Is the president showing that he definitely has strength and still has a seat at the big table? Well, certainly China's efforts to court Latin America and other global South countries are longstanding.

21:29I think Beijing is making a lot of this moment where a lot of those countries, in particular Brazil, are facing a heavy weight of U.S. terrorists and trying to gain the most that it can from those relationships, positioning itself as sort of the rocking Trump storm. I think from the U.S. perspective and really from Trump's perspective in particular, he has kind of brought back this theme of almost a Monroe doctorate approach to Latin America, where this is considered the U.S.'s traditional sphere of influence. And he's going to push back on China, especially in places like the Panama Canal that are regarded as kind of strategic choke points.

22:03I think for many countries in that region, though, the question is, what is the U.S. going to do to give them an alternative? because tariffs is sort of the punishment, the stick might not be enough. All right. One of our rocks. She is a rock when it comes to what's going on out of the White House, totally. And putting geoeconomics into perspective. Jennifer Welch, thank you so much. Joining us there from D.C., she is Bloomberg Economics Chief Geoeconomics Analyst. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

22:38This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. As for the president, just off a press event at the White House, he did say inflation is down to a perfect number. He said hardly any inflation at all. He also mentioned the stock market soaring, 401Ks soaring. He also talked about something that is certainly a focal point for us, and that is the meeting between the United States, President Trump, and Russian President Vladimir Putin.

23:18The president saying that he thinks President Putin will make peace, and also talked about a second meeting will be more important than tomorrow's, and talked about potentially European officials being part of that meeting. And that is kind of where we want to start. Getting an end to that more than three and a half year old war will likely take time and more than one meeting, as we just heard from President Trump moments ago. We have a meeting with President Putin tomorrow. I think it's going to be a good meeting, but the more important meeting will be the second meeting that we're having. We're going to have a meeting with President Putin, President Zelensky, myself, and maybe we'll bring some of the European leaders along.

23:54Maybe not. I don't know that it's going to be very important. We're going to see what happens. And I think President Putin will make peace. I think President Zelensky will make peace. We'll see if they can get along. And if they can, it'll be great. All right. That, of course, was President Trump just earlier this hour talking from the White House, talking about meeting President Putin, talking about expectations for a second meeting, talking about bringing European leaders in and saying that he thinks President Putin will make peace. He also said he thinks President Zulensky of Ukraine will make peace.

24:29So we are going to be watching that certainly tomorrow. All right, let's get to our guest, because this is kind of our big backdrop. We welcome to our studio. She's been patient as we go through all of the news today. And here at Bloomberg headquarters, Nicola Willis, she is Minister of Finance for New Zealand, joining us here in studio. There is a lot going on. Thank you for your patience. Welcome, welcome. How do you see kind of the macro environment? There's so much going on for so many different countries. We have a very active White House. We call it an activist White House. And I'm just curious, how would you describe the state of world affairs today?