Joe Lonsdale, cofounder of Palantir and founding partner of Austin-based venture capital firm 8VC, on Thursday voiced deep unease over the federal government’s $8.9 billion investment in Intel, calling the move an unusual and potentially troubling precedent.
Appearing on CNBC’s Squawk Box, Lonsdale said he was “uncomfortable” with Washington’s decision to inject billions directly into one of the country’s biggest chipmakers.
“It’s very weird, of course, for the government to be taking a stake in something,” Lonsdale said. “It’s also a little bit weird for the government to be giving $9 billion to a company, too.”
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Lonsdale described the deal as “cronyism in some form.” Cronyism, the softer cousin of nepotism, generally refers to the practice of bestowing jobs, contracts, or benefits on allies or well-connected firms.
The Unusual Nature of the Deal
The funding package draws from the US CHIPS and Science Act, the $52 billion law signed in 2022 to boost domestic chipmaking and reduce reliance on foreign supply chains. According to Intel, the government’s equity stake will be funded by:
- $5.7 billion in grants already awarded under CHIPS but not yet disbursed, and
- $3.2 billion awarded through the Secure Enclave program, which aims to expand secure US semiconductor manufacturing.
What makes the Intel deal so striking is that it is not happening during a financial crisis or national emergency. Historically, government equity stakes in private firms have been rare and tied to economic distress — for example, the 2008 financial crisis, when Washington took temporary ownership in banks and automakers.
This investment, however, comes at a time when Intel is under pressure to catch up with Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung in advanced chip production — but not on the verge of collapse. That raises questions about whether the move could become a template for broader industrial policy.
A Shift Toward Sovereign Wealth-Style Intervention?
Kevin Hassett, Director of the National Economic Council, defended the move last month, telling CNBC that more such investments could follow. He likened the Intel stake to a sovereign wealth fund, which many countries use to invest directly in industries and companies and redistribute profits to citizens.
“There’ll be more transactions, if not in this industry, in other industries,” Hassett said.
If true, the Intel deal may mark the start of a new US government approach to industrial investment, blurring the lines between subsidies, bailouts, and equity stakes.
While critical of what he sees as favoritism, Lonsdale acknowledged one exception: national security. He said he would be more comfortable if the investment could be directly tied to safeguarding America’s technological independence.
“If that’s the case, there’s no reason for the government not to take things,” he said.
For Intel, the deal is a windfall. The $8.9 billion injection strengthens its balance sheet as it attempts one of the most ambitious factory buildouts in its history, including multibillion-dollar fabs in Arizona and Ohio. The investment also signals that the US government views Intel as a national champion in the semiconductor race.
For investors, however, the move raises two competing narratives. On one hand, government backing could lower downside risk, effectively making Intel “too strategic to fail.” On the other hand, it raises concerns about political entanglement, precedent-setting intervention, and whether Washington will now favor certain firms over others in private markets.
However, the Intel deal is seen as emblematic of a new era of techno-nationalism, where semiconductors are treated not just as commercial products but as geopolitical assets. With US-China tensions mounting and supply chain disruptions still fresh in memory, Washington appears willing to experiment with direct ownership to ensure chip security.
But Lonsdale’s warning suggests that Silicon Valley’s investor class may remain wary of what they see as creeping industrial favoritism. If equity stakes become the norm rather than the exception, critics argue, it could tilt competition and blur the boundary between free markets and state-managed capitalism.