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Lutnick Suggests US Looking at Defense Industry After Intel Deal

(Bloomberg) — US Commerce Secretary Howard Lutnick suggested the government is looking at the defense sector and other industries for potential stakes in companies after an unorthodox deal that saw the US obtain a 10% share in chipmaker Intel Corp (INTC).

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“Oh, there’s a monstrous discussion about defense,” Lutnick said Tuesday on CNBC when pressed on whether the administration was considering similar arrangements with companies that benefit from government policies, including in defense.

Lutnick singled out Lockheed Martin Corp. (LMT), claiming the company makes much of its revenue because of the US government. “They are basically an arm of the US government,” he said.

“They make exquisite munitions,” Lutnick said, before asking: “what’s the economics of that?”

“I’m going to leave that to my secretary of Defense and the deputy secretary of Defense. These guys are on it, and they’re thinking about it,” he added. “But I tell you what, there’s a lot of talking that needs to be had about how do we finance our munitions acquisitions?”

Lockheed Martin did not immediately reply to a request for comment on Tuesday morning. The US government accounted for about 73% of the company’s net sales last year, according to a securities filing.

Lutnick’s comments follow a deal finalized last Friday in which the US government obtained a stake in Intel in a bid to turn around the beleaguered chipmaker. Under the agreement, the US will receive 433.3 million shares of common stock — representing nearly 10% of the fully diluted common shares in Intel.

The $8.9 billion investment will be funded by grants from the US Chips and Science Act and Secure Enclave program that had previously been extended but not yet paid, Intel said. Together with the $2.2 billion in Chips and Science Act money that Intel already received, the investment totaled $11.1 billion.

The government will be a passive owner, with no board seat or other governance or information rights, Intel said. Still, the move stunned Wall Street and Washington, highlighting how President Donald Trump has embraced a new brand of economic statecraft in his second term.

Though Lutnick appeared in the CNBC interview to brush aside the prospect of sweeping US government moves to take equity in private companies, he repeatedly emphasized the benefits of the Intel arrangement to American taxpayers.

Where US companies are getting government investment, it makes sense for leaders to press for a better deal, he said. “Let’s get the benefit of the bargain,” he said. “You’ve got to push these people. You can’t be a pushover.”