Intel Photo: VCG

The US government is reportedly to take another step to distort business operations as the White House confirmed on Tuesday that the Trump administration is working on a deal that could see the US government taking a 10 percent stake in chip giant Intel, the BBC reported on Wednesday.

Chinese observers following the event warned that the move may raise concerns among US tech companies over the issue of unfair competition and discrimination as well as international consumers toward the company over suspicions of "backdoors" or additional regulatory requirements under the government's participation.

"The president wants to put America's needs first, both from a national security and economic perspective," White House press secretary Karoline Leavitt told reporters, per a BBC report.

US Commerce Secretary Howard Lutnick also confirmed discussions between the US and Intel Corp for the government to take a stake in the chipmaker, casting the plan as a bid to convert the CHIPS and Science Act grants into equity, Bloomberg reported.

According to the report, Lutnick on Tuesday said the plan would not give the US governance or voting rights in the company, even though it could make the federal government Intel's largest shareholder.

Some media reports mentioned China as being a motivator in the Intel case.

"The US government is taking a China card here and trying to have a little more control over some of the production that these companies are having," Reuters reported, citing Clark Geranen, chief market strategist at CalBay Investments.

While the deal is still unfolding, Chinese analysts believe the outcome could be of great significance in US corporate history.

Li Haidong, a professor at the China Foreign Affairs University, told the Global Times on Wednesday that this new development indicates the US is gradually abandoning its tradition of free capitalism at the governmental level and pivoting toward a path of state capitalism. 

"This indeed represents a fundamental shift in the US economy, or more precisely, in the relationship between the government and businesses. It will set a benchmark for future interactions between the US government and its domestic enterprises, as well as for relationships between global businesses and their respective governments," Li said.

While the US government has in the past injected funds into US companies vital to its economy, there is a difference in this potential deal from previous ones, a Chinese expert pointed out.

In 2009, the US government bailed out General Motors in exchange for company shares when the company filed for reorganization. The government later sold its shares. 

He Weiwen, a senior fellow at the Center for China and Globalization, told the Global Times on Wednesday that Intel is challenged by a lack of innovation and weak competitiveness but it does not face life or death issues.

After missing out on the mobile computing era, Intel has fallen even further behind in recent years during an artificial intelligence craze that has been a boon for two of its once-smaller rivals, Nvidia and Advanced Micro Devices, according to AP.

"Thus, the aim of the deal seems to be reinforcing the level of support to key US semiconductor companies while seeking more control over the company," He said. "However, having a stake in Intel and becoming the largest stakeholder won't help address the company's innovation weakness, as it requires elements more than funds, such as talent."

Intel is a key player in US government's plan to bolster chip manufacturing on its shores. Last year, Intel received incentives from the CHIPS and Science Act for its manufacturing projects in in Arizona, Ohio, Oregon and New Mexico.

"If the deal goes through, it will likely entail frictions among US tech companies, as the government is partially aiding a specific company instead of others, impairing market justice," He said.

Xiang Ligang, a Chinese telecom industry expert, told the Global Times on Wednesday that the reported discussion reflects the urgency of the US government to use all available means to enhance the competitiveness of struggling chip companies.

However, Xiang warned that concerns may arise among international clients that Intel's products could be influenced by policy considerations, particularly in markets like China, where suspicions of "backdoors" or additional regulatory requirements could emerge. This would erode trust in Intel and negatively impact its foundry services and product sales.