I assume this is obvious, and not just in the realm of economic planning, but America’s moving very rapidly in the direction of top-down management.
I’ll prove more adept than most at navigating every vector of this national metamorphosis because unlike nearly everyone else, I took seriously the writing on the wall. I read that writing to you, out loud, in these pages, every day for nearly a decade. If you didn’t listen, or dismissed it as partisan fearmongering, that’s on you.
Don’t expect too much in the way of bewailing from me going forward. I did the lamentations already, when it was still safe to do so, all while cautioning that public mourning, particularly when expressed as satire, wouldn’t be safe forever. Now it isn’t safe, and I’ll write accordingly because, again, I knew this was coming and I was prepared for it.
With that oblique nod to the country’s increasingly exigent circumstances, the US government caught a “lucky” break on Thursday when Jensen Huang abruptly decided to plow $5 billion into a development partnership with — checks notes — perennial underperformer and semiconductor also-ran Intel.
Why, you might ask, would a company with a monopoly on the most advanced chip technology the world’s ever known — technology which, for better or worse, is catapulting humanity into a sci-fi film — want to invest in a co-development project with a rusty old relic that’s by now synonymous with underachievement?
One explanation says Huang’s decision could be related to an August 22 agreement for the US government to take a massive equity stake in the same underachiever.
The figure above’s the only chart that’s relevant. Donald Trump needs Intel to trade at $20.50 to break even. Nvidia drove that sucker to nearly $33 on Thursday, when Huang described a “historic collaboration” — “a fusion of two world-class platforms” which’ll “lay the foundation for the next era of computing.”
The Trump administration’s Intel position, funded by leftover billions from the CHIPS and Science Act, raised eyebrows for being, um, too Chinese. Or that’s what critics said anyway. Critics like the Cato Institute’s Scott Lincicome who, in a scathing Op-Ed for WaPo, called the tie-up “a dangerous turn in American industrial policy.” “Decades of market-oriented principles have been abandoned in favor of unprecedented government ownership of private enterprise,” he warned.
That was last month. Who’s laughing now, Scott? I’m just kidding. But we shouldn’t kid ourselves, which means we shouldn’t be obtuse. Huang’s gone out of his way (and then some) to lobby the administration in recent months, and he’s very keen to foster the sort of transactional friendship between The White House and Nvidia that Trump’s so fond of.
Given that, and considering Intel’s “not a lean, mean, innovating machine,” as Lincicome quipped, you won’t be blamed for suggesting that Trump simply instructed Huang to make some manner of deal with Intel, in exchange for… well, who knows. We’ll find out the details of any quid pro quo later. Or never.
I don’t think this is necessarily a bad thing, by the way. Which is to say I’m not in the camp that assumes all industrial policy is akin to Chinese-style top-down management and therefore deserves to be derided as an intolerable intrusion into the free market and thereby anti-capitalist.
But… well, again, we shouldn’t delude ourselves about America’s national trajectory. On any front.
Now I get it, I’m so slow. Going long a few calls after the next US of Trump investment. For the lulz.
My obsession with rare earths really paid off when the DoD decided to take a stake in MP Materials.
When in Rome.
Sorry, but Huang has been talking to Intel for months, starting before Trump was returned to office. He has held talks with Samsung as well. He has not allowed loyalty to the nation of his birth to find ways to diversify away from total reliance on TSMC fabs on the island. As has Apple. And SpaceX. Even Lisa Su has begruginly agreed to send business to the TSMC fabs in Arizona.
Perhaps they worry that DJT will use Taiwan as a bargaining chip in negotiations with Xi. Unlike Biden, he has never commited to use US military force to defend Taiwan, instead accusing the island of stealing the chip industry from us.
Crazy? A recent piece in the Asia Times reported that “The newest National Defense Strategy just delivered to Secretary of War Pete Hegseth calls for refocusing the Department of War on domestic and regional missions instead of global adversaries like China and Russia. The document – supposedly the work of Under Secretary of War for Policy Elbridge Colby – overturns decades of received interventionist wisdom.”
“In his confirmation hearings, Colby did display surprising flashes of realism declaring, “Taiwan is very important to the United States, but… it’s not an existential interest.”
Don’t apologize, Derek. Because I can assure you that Trump was involved in this.
Maybe just a “finder’s fee”, eh?i
I was struck by Colby’s suggestion that the US focus pivot to Regional and Domestic defense. What does domestic mean?
The point of the article — obviously — isn’t to suggest that Jensen Huang had never heard of Intel nor knew anything about it before Donald Trump brought it up over lunch. “So there’s this company called ‘Intel,’ — not sure if you’re familiar, but they could use a little help…” Rather, the point is just that if Huang was considering a list of options for different sorts of strategic investments and that list was, say, five companies long on August 21, it (the list) narrowed to one company “long” on August 22.
Domestic…maybe, as in Venezuela? You know, with all that heavy black gold (since Canada doesn’t seem to want to play ball)?
For what it’s worth, Jensen was asked during their press conference earlier today if Trump had any involvement in this deal. He said absolutely not, that he expected the US Govt would be supportive, in fact that Lutnick was ecstatic when he told him about it, and this deal had been under discussion for over a year. Considering how light on details this announcement was, I have some doubts of that characterization. Although that could also be due to Intel’s lack of clarity in roadmap and execution…
“For what it’s worth…” How much do you reckon that is?
Folks, this kinda goes back to what I alluded to at the outset of this article. Sooner or later (later, obviously) we’re going to have to come around to a reality that some of you, despite insisting you get it on grumpy days, haven’t really come to terms with just yet.
Nothing goes down in America right now without Trump’s blessing and/or involvement. Suggesting that Nvidia made this move without Trump in the mix somewhere is like suggesting a $5 billion co-development project in Turkey involving a state asset came together without Recep Tayyip Erdogan’s involvement. In other words: It’s a completely ludicrous suggestion.
Trump’s now managing late-night television in this country. And you think a $5 billion investment from a man who meets with Trump regularly in a company that Trump’s government bought a 10% stake in less than a month ago happened without his blessing / involvement / knowledge? As the kids say, “gtfoh.”
I’m very glad you’re so on top of stuff and ahead of the pack. The news coming out of America this week has been very, very disturbing but it seems people do not really acknowledge the severity of it (both here in Europe and in the US).
Thanks to the nod and for letting us know how you will deal with this going forward. It’s the best way for now and I’m thankful that we will still be able to read from you despite the current circumstances.
I think that although BOJ has been selling bank stocks, they still own about 5-7% of the Japanese ETF’s. BOJ stopped buying in 2023, but I don’t think BOJ has started selling any of that position, yet.
Even if I don’t like that the US government is buying US stocks- I am not going to be foolish by not positioning myself to benefit from this.
You were paying attention and so was I. The different world we now live in is not apparent to many, it is apparent to the suckups, minions, cult members and some (not conservative) serving republicans who want to get their licks in now, before the whole sideshow collapses. They strut and announce and proclaim and bask in this unreality. I thought the 2020 election was a turning point, but we got a different terrible president and four years latr, re-elected this one. It is a nasty joke on the universe.
I might be a masochist, but I continue to subject myself to commentary about how there is some precedent for each and every one of Trump’s actions. Cancel culture, executive overreach, etc. and it’s always placed at the feet of liberals/some guy on the internet/people who’ve been dead for 200 years. The fact that so many people still can’t see that this is very, very different once again shows how screwed we are.
It’s sad that your content, along with many others, is being censored, but you’ve basically said everything that can be said at this point. I was thinking about sending you an email to ask you about your approach to political commentary under this regime, but I figured you’d eventually state the obvious.
I could not have imagined the stupidity of the language used to complete the transformation of our country into an autocratic state, but it’s a testament to our country’s collective inability to reason beyond a 5th grade level.
Don’t forget, the laws of statistics guarantee that 170 mil of our population is of below-average intelligence and above-average gullibility. I taught college students, mostly seniors, for 40 years. The main course I taught, strategic management, gave me great insight into the results of the four years of work those students had done. Very scary stuff. Like staring into the abyss. Over my career I wrote several books, some covering finance and investment topics. All but one were written under contract. The first one was an entry level investment text. As I began submitting chapters to my editor I was told my writing was too strong. They had a tool they used to scan submissions. They told me that their policy for college texts was that they be written at the eighth grade reading level so I had to dumb down my book. Also, remember Trump was elected by less than 50% of the eligible voting public. Millions of eligible voters didn’t vote. They couldn’t be bothered. So there you are, the greatest nation in the history of the world will soon be destroyed from the inside by those who can’t can’t comprehend what’s happening to them.
Thank you for relating those experiences.
I recall that some of the original framers of the constitution were concerned about the possibility of the poor & unwashed voting for measures that would benefit them. Thus the checks & balances, in the final document.
It also helps explain the rise of Peter Thiel and Marc Andressen’s efforts to replace democracy with a dictatorship of wealthy Silicon Valley people.
“In Andreessen’s 2023 “Techno-Optimist Manifesto,” he presents a sweeping argument: technological innovation is the ultimate solution to social problems — from poverty to stagnation to inequality. Builders and investors like himself, he insists, should be left to work without interference from regulators, ethicists, or journalists. Democratic constraints are framed not as necessary checks on power but as symptoms of a culture infected by fear and demoralization.”
What reads like an out-there fringe movement is well represented in the Trump administration.
I just hope H has filled out his mortgage documents properly…
Either that or not involved in any major media mergers. We might end up with a hostile takeover of the Heisenberg Report by Newsmax if H isn’t careful.
I’m going to go out on a limb here and speculate that “H” has never filled out a mortgage document in his life.
I hope it changes H.
I’ll miss your unfiltered thoughts