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President Donald Trump on Monday turned the federal government into the largest shareholder of Intel, giving it a 10% stake in the troubled American chipmaker. The move runs counter to nearly half a century of Republican economic orthodoxy and has drawn withering criticism from conservatives who are usually allies of the former president.

Trump has defended the deal, however, and described it as a “great investment” that will make the U.S. “richer and richer.” He has also suggested it is the first in a series of such government investments. “I hope I’m going to have many more cases like it,” Trump said. The action appears to signal a return to what used to be called industrial policy: an active role for government in picking and subsidizing the nation’s largest industries.

In so doing, Trump has raised questions about the nature of the decision: is it, in fact, socialism? By many definitions that have been used for decades, one feature of socialism has been government ownership of the means of production for the good of society. By that measure, Trump’s move, critics say, is not so different from the state capitalism of China or Russia.

The political irony, meanwhile, is evident to all. When Barack Obama set about taking control of Chrysler and General Motors in 2008–9, it was, in conservatives’ eyes, a necessary act to save two American icons from financial meltdown. Had Obama taken a 10% stake in Intel instead, allies of Trump say, the conservative media would have called him a communist.

The difference, Trump and his allies say, is that this is not a bailout. “I turned a loan or a grant into equity,” Trump said, pointing out that he had turned $8.7 billion in grants — which the company was already set to receive from the government under Biden’s bipartisan Chips Act — into government equity. By doing so, Trump argued, the deal created $10 billion to $11 billion in value for taxpayers overnight. “Why are ‘stupid’ people unhappy with that?” Trump asked.

Powerful conservatives disagree. Trump’s top economic adviser, Larry Kudlow, now on Fox Business, said Tuesday he was “very, very uncomfortable with that idea.” Steve Moore, an informal adviser, was blunter, telling Laura Ingraham, “I hate corporate welfare. That’s privatization in reverse. We want the government to divest of assets, not buy assets. So terrible, one of the bad ideas that’s come out of this White House.”

The editorial page of National Review published a note warning that “government shouldn’t get into the chip business.” Thom Tillis, a senator who was an early Trump backer, said the deal risked turning Intel into a “semi-state-owned enterprise a la CCCP,” or Soviet Union. Rand Paul made a similar point on social media: “Wouldn’t the government owning part of Intel be a step toward socialism? Terrible idea.”

The deal is being cheered, however, by those on the left who have long urged the government to use its power to shape industry for society’s benefit. Senator Bernie Sanders of Vermont called it a “great step forward.” Commerce Secretary Howard Lutnick leapt to Trump’s defense, too, telling Laura Ingraham: “That is not socialism. That’s the best businessman in the United States of America in the Oval Office doing fair things for us.”

Intel, for its part, has said in a required SEC filing that the arrangement “may adversely affect our ability to obtain future U.S. Government grants, damage our reputation and our relationships with customers, and harm our global sales and business in general. It may also subject our business to additional regulation.” Intel, which announced this year that it would lay off 15% of its staff, is already under pressure. The company’s market valuation is around $110 billion — down 50% since the start of 2024. On Monday, its shares jumped 4% immediately after Trump’s announcement.

The Wall Street Journal reported that Trump had demanded the resignation of Intel CEO Lip-Bu Tan on the grounds of past ties to China and was only persuaded not to by a personal meeting at the White House. “I liked him a lot, I thought he was very good,” Trump said afterward.

Trump’s critics say the real story will be how, if at all, the U.S. government as a non-voting shareholder wields its influence on Intel, with a president who just happens to be the largest shareholder in the country’s most important chipmaker. Trump and his allies have dismissed such concerns: The U.S. government will not have any oversight of Intel business decisions, they say.

Intel could be a positive or a negative example for Trump and the GOP going forward. If the company recovers, Trump will take the credit for shoring up one of the most important U.S. industries; if not, the American taxpayer will take the loss. If Trump follows through on his word and starts making similar deals, too, the question about whether socialism or capitalism is only going to get louder.

One thing is certain: The Intel deal, even if no others follow, will mark a fundamental change in the relationship between the federal government and private business. It is yet another measure of just how Trump has transformed the Republican Party’s economic policy.