Inside the Trump administration's equity stakes in 30 companies

Yahoo Finance Washington Correspondent Ben Werschkul joins Market Domination to discuss the Trump administration's equity stakes in 30 companies, what those investments mean, and how investors are viewing the government's growing role as a corporate shareholder.

Video Transcript

00:00 Ben

So we got here through a a series of deals that the Trump administration has been working on for over a year now that have spanned a range of sectors, quantum computing, steel, rare earth minerals are there, but semiconductors have really been the focus from the start and are and are the major element here.

00:22 Ben

The the most prominent one, of course, was the the stake in Intel, that's it, the 10% stake in Intel that the Trump administration announced about 11 months ago. But they've really expanded the portfolio this week with stakes in seven other semiconductor companies that could see 874 million go out to these companies, if if these letters of intent are finalized in return for equity stakes.

00:46 Ben

Um, this this this this money will go out in in elements from $30 million to $245 million. The biggest one, the biggest name here is Global Foundries, who's who's in line for a $300 million um, stake here.

01:00 Ben

If if this if the if this goes forward, this would actually be the second one for Global Foundries. They had another equity stake taken on on quantum computing. So the government's very involved there. But this is a range of companies and we see the Trump team essentially across these sectors acting akin to a kind of venture capitalist of sorts.

01:17 Ben

They take a stake in a bunch of different, smaller, high-risk companies to both, in their view, improve the strategic the improve the this sector from the strategically important, but also get the upside if with these equity stakes.

01:31 Speaker B

How would you sort of compare and contrast, Ben, uh the Trump administration's approach here to Biden's?

01:41 Ben

Oh, it's it's it's night and day in in how they're approaching this. This money is actually available because of Biden. This is the 2022 Chips and Science Act that it was a major Biden initiative, bipartisan bill that Biden signed into law. The idea of the bill and the idea of how Biden initially implemented it was grants and loans.

01:56 Ben

You you sort of pick the pick these companies, you give grants or you give loans in order to spur them. But there's no there was never talk of equity stakes until the Trump administration came along, frankly until a few months into the Trump administration when we saw some examples and they they clearly got interested here.

02:11 Ben

This is an approach that the Trump is only kind of seems to be increasing, but it does have its critics. We're seeing lots of questions here about once you take a bunch of stakes here, are are is the government picking parts of the sector to be favored?

02:26 Ben

Now, the Cato Institute has been really vocal about this. What happens when these companies falter, does the government step in? We haven't seen that tested yet, but that's going to be a major question as we go forward.

02:38 Speaker B

Having said that, Ben, could the American taxpayer end up uh actually making money here?

02:45 Ben

Well, we'll see. I mean, we'll see in the overall. We do have one major example here that the Trump administration mentions and is a major winner, which is Intel. It was about 11 months ago that the government took a 10% stake. The stock has um more than tripled since then.

03:03 Ben

So these are tens of billions of dollars that are on paper are our money that's is money for taxpayer money. Like I said, it's it's a much larger effort that's that's burgeoning here. And the way that the Trump administration talks about it is as sort of the beginning of what they're hoping will be a sovereign wealth fund of sorts.

03:20 Ben

So they're not looking to sell this soon, but but clearly they're hoping that they they're able to grow this money quite quickly in a in this in this kind of venture capitalist approach.

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