Palantir Cofounder's View on Government's Intel Investment: 'Peculiar Situation'

Joe Lonsdale, who co-founded Palantir and is a founding partner at the Austin-based venture capital firm 8VC, expressed his unease on Thursday regarding the U.S. government's $8.9 billion financial injection into Intel.

"It's undoubtedly odd for the government to acquire a stake in a business," shared Lonsdale during an appearance on CNBC's Squawk Box. "Additionally, it's somewhat unusual for the administration to allocate $9 billion to a corporation."

Lonsdale referred to the situation as "a form of cronyism," where cronyism, similar to nepotism, involves favoring allies typically through granting jobs and financial advantages.

These allocations stem partly from the U.S. CHIPS and Science Act of 2022, legislation that earmarks $52 billion towards domestic semiconductor production through incentives and subsidies, and encourages the development of new manufacturing facilities.

In a statement, Intel revealed that "the government's equity interest will be financed by an existing $5.7 billion in grants previously allocated yet pending distribution, alongside $3.2 billion from the Secure Enclave program." This program aims to bolster American semiconductor production capabilities.

It is noteworthy that the U.S. government seldom invests directly in private companies, a move generally reserved for times of significant economic need, such as the 2008 financial downturn. This particular investment in Intel isn't tied to an immediate national crisis, potentially setting a precedent for future actions.

Kevin Hassett, director of the National Economic Council, communicated on CNBC that there could be additional investments forthcoming in different firms, equating the Intel case to a sovereign wealth fund. Many nations maintain such funds to invest and distribute surplus among citizens. He mentioned, "It is probable there will be more deals, whether in this sector or others."

Lonsdale mentioned his skepticism unless the investment serves the public significantly, such as enhancing national security. In that scenario, he questioned why the government would refrain from making such moves.