CATO reports Government Ownership Stakes in Companies Becoming Routine Under Trump
The Commerce Department announced this week that six more companies are set to join the federal government’s rapidly expanding corporate portfolio, bringing the total to 30 by our count. Perhaps most striking about the announcement is how unremarkable government ownership is becoming.
The seven nonbinding letters of intent would provide up to $874 million in CHIPS and Science Act research and development incentives. Six recipients would be new additions to the portfolio. The seventh, , already has a proposed Commerce stake attached to a separate $375 million quantum foundry award. Commerce says a minority, noncontrolling equity stake in each company will be a condition of final funding.
Zoom out and the pattern is more striking. Since December, the CHIPS Research and Development (R&D) Office has announced 19 final or proposed company awards totaling up to $3.8 billion. They cover 18 companies because GlobalFoundries has two separate projects. Three agreements are final, while 16 remain letters of intent. All 19 have been publicly tied to equity.
Commerce’s current funding rules state that award recipients may be required to provide equity, warrants, intellectual property licenses, royalties, revenue sharing, or other instruments to generate a government return. The Biden administration, by contrast, used the same CHIPS R&D appropriation through separate competitions to award funds to private companies without taking ownership stakes. That makes the Trump administration’s insistence on equity a policy choice. The CHIPS Act itself authorizes Commerce to make grants, cooperative agreements, and “other transactions” but doesn’t expressly authorize the department to acquire stock.
Commerce says that these stakes enhance the return for taxpayers, but even a profitable portfolio would not resolve the underlying institutional problem. The federal government is now acting as regulator, customer, financier, and shareholder. Decisions involving contracts, trade restrictions, permits, and additional subsidies can affect the value of its holdings. Competitors have reason to question whether the playing field is level. And if a portfolio company falters, Washington will have an added incentive to protect its investment with more taxpayer support.
Calling the stakes “minority” and “noncontrolling” does not eliminate those conflicts. Public announcements often reveal little about valuations, shareholder rights, oversight, or exit plans. Meanwhile, future administrations will inherit the same tool and can use it to assemble portfolios reflecting their own political priorities.
US Government Stakes in 30 Companies
- /Nippon Steel ? Steel ?️Committee on Foreign Investment Golden share with veto rights over major corporate decisions – June 2025
- ? Minerals “?️ Defense ” $400 million preferred stock and warrants, 15 percent if converted/exercised – July 2025
- ?️ Semiconductors “? Commerce ” $8.9 billion for 9.9 percent stake, plus 5 percent warrant if foundry ownership falls below 51 percent – August 2025
- ? Minerals “?️ Defense ” Proposed $35.6 million for 10 percent stake, plus warrants for additional 7.5 percent stake – October 2025
- ? Minerals “? Energy ” $184 million debt-service deferral, with 5 percent company warrants and 5 percent Thacker Pass Joint Venture (JV) investment – October 2025
- Westinghouse ⚡ Energy (nuclear) “? Commerce ” 20 percent upside participation, convertible to equity warrant if initial public offering (IPO) conditions are met – October 2025
- Vulcan Elements ? Minerals ? Commerce ?️ Defense Proposed $50 million Commerce equity, conditional $620 million Defense loan plus warrants – November 2025
- ReElement Technologies ? Minerals “?️ Defense ” Conditional $80 million Defense loan with warrants – November 2025
- /Crucible Metals ? Minerals ? Commerce ?️ Defense $210 million CHIPS funding, Commerce gets indirect Korea Zinc stake through the Crucible JV; Defense $150 million of JV equity and $1.25 billion of JV debt financing – December 2025
- xLight ?️ Semiconductors “? Commerce ” $150 million CHIPS funding, with Commerce equity stake – December 2025
- /Missile Solutions ? Rocket motors “?️ Defense ” $1 billion convertible preferred security in Missile Solutions, plus warrants; converts to common at IPO – January 2026
- Atlantic Alumina Company ? Minerals “?️ Defense ” $150 million Defense preferred equity stake – January 2026
- ? Minerals ? Commerce Up to $277 million direct funding and up to $1.3 billion loan, with shares and warrants – January 2026
- GlobalFoundries ⚛️ Quantum computing “? Commerce ” Proposed up to $675 million across two CHIPS LOIs: $375 million for a quantum foundry and $300 million for silicon photonics. A separate agreement gives Commerce an approximately 1% equity stake. – May 2026
- IBM/Anderson ⚛️ Quantum computing “? Commerce ” Proposed $1 billion for a minority stake in Anderon; IBM will contribute $1 billion plus assets and intellectual property – May 2026
- Atom Computing ⚛️ Quantum computing “? Commerce ” $100 million planned funding, with minority equity stake – May 2026
- Diraq ⚛️ Quantum computing “? Commerce ” Up to $38 million planned funding, with minority equity stake – May 2026
- ⚛️ Quantum computing “? Commerce ” Proposed $100 million for $100 million equity stake at final award – May 2026
- ⚛️ Quantum computing “? Commerce ” Proposed $100 million for common stock priced 15 percent below the lower of the letter of intent-date or final agreement market price – May 2026
- PsiQuantum ⚛️ Quantum computing “? Commerce ” $100 million planned funding, with minority equity stake – May 2026
- ⚛️ Quantum computing “? Commerce ” Proposed $100 million for common at lower of 20 percent below $60 IPO price or 15 percent below the award date closing price – May 2026
- ⚛️ Quantum computing “? Commerce ” Proposed $100 million over three years for common stock priced 15 percent below the lowest of the May 20 or award-date close – May 2026
- SandboxAQ ?️ Semiconductors “? Commerce ” $500 million CHIPS funding, with minority equity stake – June 2026
- I-Pulse ?️ Semiconductors ? Commerce $250 million CHIPS funding, with minority equity stake – June 2026
- Kepler Computing ?️ Semiconductors ? Commerce Proposed up to $245 million in CHIPS funding, with minority equity stake – July 2026
- Multibeam Corporation ?️ Semiconductors ? Commerce Proposed up to $140 million in CHIPS funding, with minority equity stake – July 2026
- Extropic ?️ Semiconductors ? Commerce Proposed up to $75 million in CHIPS funding, with minority equity stake – July 2026
- Thintronics ?️ Semiconductors ? Commerce Proposed up to $50 million in CHIPS funding, with minority equity stake – July 2026
- OBSIDIA Semiconductors ?️ Semiconductors ? Commerce Proposed up to $34 million in CHIPS funding, with minority equity stake – July 2026
- ?️ Semiconductors ? Commerce Proposed up to $30 million in CHIPS funding, with minority equity stake equal to the award amount. – July 2026
Notes
- The points exclude Development Finance Corporation (DFC) transactions because Congress expressly authorized DFC to make minority equity investments in the 2018 BUILD Act, years before the second Trump administration.
- The U.S. Steel golden share is included because it grants the federal government firm-specific veto rights despite carrying no conventional economic interest.
Four Key Issues
- The federal government is now acting as regulator, customer, financier, and shareholder. Decisions involving contracts, trade restrictions, permits, and additional subsidies can affect the value of its holdings.
- Competitors have reason to question whether the playing field is level.
- Calling the stakes “minority” and “noncontrolling” does not eliminate the conflicts. Public announcements often reveal little about valuations, shareholder rights, oversight, or exit plans.
- Future administrations will inherit the same tool and can use it to assemble portfolios reflecting their own political priorities.
Corporatist Industrial Policy
This is state capitalism / corporatist industrial policy. Calling it communism overstates the case.
However, and unfortunately, it’s more government economic intervention into the markets.
The irony Cato highlights is real: a Republican administration is normalizing tools that expand the state’s direct financial interest in private firms with risks to taxpayers.
That’s on top of government favoritism creating a very unwelcome shift towards government favoritism picking winners and losers.
MAGA cheers.
