It's just that the groups that can do eminent domain tend to both have guns and be in charge of the local legal system.
Which means they get to define the rules and make up their own name for when its them doing the thieving. ;)
You shouldn't misuse words like you're intentionally doing. Why not go all the way and call it rape or something.
If the company won't accept money in one of those 3 forms they probably don't need it.
That's certainly not the case, though.
For example, the US could give Intel $8B for about 4% of Intel (at today's market price). However, that wouldn't get them the new US chip fab that they want. It would get them 4% ownership of Intel.
Another example, the US could give Intel money to build them a supercomputer. The US would get a supercomputer, but it wouldn't get any ownership of Intel. When I buy Intel processors, I get a product, but no ownership of the company.
In this case, the US wants to buy a product: a US based fab. You might say "but the fab benefits Intel." You're totally right, but when I buy Intel processors it gives Intel capital they'll use for their benefit as well.
The real question is whether the US is overpaying for this fab or if the fab is even worth it. Could the US have gotten the product it wants cheaper? Is having new US based fabs worth paying for?
I think the answer to the latter is a resounding "yes" for strategic reasons. Tens of billions is a tiny drop in the bucket to help ensure something bad doesn't happen to one of the most important industries to US prosperity. We spend $850B/year on the military to try to ensure continued US security and prosperity. Giving Intel $8B is probably a bargain by comparison. Likewise, if you hate that Intel is being given $8B, you'll really hate how much Boeing, Lockheed, Raytheon, Northrop, and General Dynamics get from the government.
Sure, the US could have required Intel stock as part of the deal, but depending on the amount of stock, Intel would have likely rejected it. Should the US have offered $11-12B for 2% of Intel plus a US fab? If that's the case, why doesn't the US government simply buy stock in Intel today?
If your argument is that the US should end up with 20% of Intel for that cash, Intel would reject it. That's giving Intel a tiny fraction of what their stock is worth - 20% of Intel is worth $38B. If the government wanted to nationalize Intel, it'd probably cost them $210-250B. The government isn't just allowed to take something without just compensation. While Intel's market price is $188B, usually buying a whole company involves having to pay a premium over that.
The US has taken ownership stakes in companies in some scenarios. For example, the bank "bailouts" gave the US preferred stock with a dividend rate of 5% that would climb to 9% from 2008-2013. The government also got warrants to purchase common stock at a very low price. Recipients generally repaid what they were given and the government made billions off the stock warrants. In the case of the bank "bailouts", the government was giving the banks money to help save the banks and demanded ownership in return.
By contrast, Intel doesn't need help. The US government wants to get Intel to do something; the government wants to pay Intel to make them a product. Maybe the government could have gotten a better deal than $8B. However, given that few companies could legitimately create modern fabs and given that even companies like TSMC have been having difficulty at creating fabs in the US, $8B doesn't seem like a crazy amount of money to be offering as a carrot. It looks like the US is also spending $6B on Samsung and $5B on TSMC to get them to build fabs here.
If the US wanted ownership and a new fab, it would cost more than $8B. If the US wanted a new fab plus 10% of Intel, it'd likely cost them $25-30B.
“More Intel stock” is not in the list of things the government prioritizes. For good reason.
Plus, Intel doesn’t want to be saddled with bureaucratic partners.
Why make a deal more expensive and unattractive to both parties? Better to keep the deal focused on what is actually trying to be achieved.
And a seat on the board retains its fiduciary duty to the company.
It doesn’t allow the government to usurp the company and its resources for its own ends at the expense of other shareholders
If you take without giving something back, that’s an actual taking and that’s illegal outside specific circumstances.
EDIT: Sorry, read this as strings attached to what Intel could do with the money.
I would assume the subsidy is contingent on Intel actually setting up the fab and some output numbers, seems idiotic to do it any other way. Don't think this was a bailout or handout at all. I haven't seen the agreement though.
This is typically false, usually the subsidies are in the form of tax credits that are only awarded once you perform the desired action, or at least have to be paid back if you fail to do so. They don’t just cut a check and wash their hands.
This is true for individuals as well as corporations. When you do your taxes this year, take a look at credits like the renewable energy credit. You have to actually purchase insulation or solar panels to be eligible for the credit.
https://thehill.com/opinion/4517470-dei-killed-the-chips-act...
This is still a US based company, with US leadership
Punishing a company just because it's american.
Is that market so poor that subsidies really is needed on the basis of profitability?
Look at TSMC. It started setting up US operations years ago and is expecting to complete many years from now.
OTOH they started setting up in Japan about a year or so ago and are already cranking out chips.
The government needs to address that instead of subsidizing one off efforts.
TSMC is looking to bail completely on the second fab / even intel is now looking at delaying. The problem we are running into is a lot of DEI language was included in the chips act which is making it hard for TSMC (and Intel) to comply. This is not a good PR move to say this outright so they will just give more generic "labor" shortages etc as the official reason.
Perhaps American workers. But an alternate take is that American consumers got cheaper chips and PCs - which resulted in more being sold, more companies and people using them, greater efficiency and new ideas and perhaps a more productive economy.
It will be interesting in 5-10 years if the US needs to tax/block possibly cheaper and better components built outside the US being sold
That may be true for Intel's CPUs but when products aren't produced by monopolies, those that have the cheapest costs and are in competition with others, often lower their prices to compete where the competitor can't. For example: AMD, graphics and motherboard parts
My understanding is that the price should never be set based on production cost but on the value it brings to the customer. Thereby, a simple program you or I could hack together in a month, might have a cost of 10k in labor only cost, but if it would save the customer millions each year, they would pay a million for it.
So, you set the cost based on how much they are willing to pay, based on how much they would profit/save.
If another competitor offers a similar solution, you just undercut them by 10%, or invest another 10k for superior features.
AT&T would have zealously guarded the transistor patent and never have licenced it out to Motorola, TI, etc. if they only cared about maximising shareholder value.
That's insanely expensive. Today the only companies that make leading edge chips are TSMC, Samsung, and Intel. Global Foundries (headquartered in US) dropped out a few years ago because it was too expensive. How on earth are you going to fund "a race with multiple companies to build the best chip factories"? It's going to cost multiples of whatever the intel subsidy is.
And if you really wanted to cover all "critical" industries, even this would be a drop (or maybe a puddle) in the ocean.
Now the pendullum might finally be swinging back towards pro-competition and healthy open markets.
I doubt Intel would need any money or other incentive if the orders start coming in.
This is also why nobody ever wants to cut the DoD budget, it's basically the backbone of American manufacturing for everything. All the stuff our company makes for the military needs to be US made, despite us being able to get the same stuff from China for 1/10 the cost.
It's also a kick-your-door-down-and-go-prison offense if you try and skirt this. My company knows that first hand (unintentional, but the DoD doesn't care)
To coerce otherwise nonprofitable behavior from Intel instead of paying for desired changes?
Shareholders and talent will flee.
The same way that they can restrict the export of certain technologies to certain countries.
This is really just the typical international racket of the rich getting richer.
The government does not want return of investment. The government wants to lose money so that national security gets better.
The government doesn't want a dollar ROI in the sense of increased revenues because it defines the dollar. What happens to the local currency is just one factor in the overall considerations.