The US government is buying shares in strategic companies.

US Government Acquires Shares in Strategic Companies

The industrial policy of the United States is entering a new phase. The Donald Trump administration has taken a significant step to strengthen national security strategy by directly owning shares in five large publicly traded companies.

Companies in the New Portfolio

The government’s share acquisitions include semiconductor giant Intel (10%), rare earth producer MP Materials (15%), Lithium Americas (10%), Trilogy Metals (10%), and US Steel Corporation ("golden share").

Notably, the investment in Intel was made utilizing previously approved grants from the CHIPS Act. The government invested $5.7 billion for a 10% stake in Intel's foundry business. This move aims to preserve Intel's unprofitable foundry operations.

Investments and Expectations

On the date of the share acquisition, August 22, Intel's shares closed at $24.80 and rose to $36.59 by October 6, achieving a return of 47.54%. Additionally, the DoD acquired a 15% stake in MP Materials under a public-private partnership to counter China's dominance in the global rare earth market. MP Materials operates the only fully integrated rare earth mining and processing facility in the United States.

Since the agreement was made, this share has provided a gain of 64.77%, with the share price reaching $74.33 on October 6.

To acquire a 10% stake in Lithium Americas, the government has entered negotiations regarding the restructuring of a $2.26 billion federal loan. The project is expected to become the largest lithium operation in the Western Hemisphere when it comes online.

On the other hand, the government announced its intention to acquire a 10% stake in Trilogy Metals to support mining exploration efforts in Alaska's Ambler Mining District. This plan includes options to purchase up to 7.5% of the company.

Future Expectations

The US government indicates that it is considering further expanding this direct investment strategy. Commerce Secretary Howard Lutnick emphasized plans to purchase shares in large defense contractors like Lockheed Martin. This has led to a significant rally in defense shares in the markets.