Intel’s underlying problems won’t be solved by the U.S. government purchasing an equity stake in the struggling chipmaker, Bernstein warned clients in a note published Friday. The Trump administration is in talks with Intel to buy a stake in the company to help fund a delayed manufacturing hub in Ohio, people familiar with the plan told Bloomberg News . It is the latest example of President Donald Trump’s interest in building government-backed national champions in strategic industries, in a stark departure from the free-market orthodoxy of previous administrations. Investors welcomed the prospect of government intervention with Intel’s stock gaining about 7% on Thursday in response to the Bloomberg report. Bernstein is “still not hugely tempted to get involved,” analysts led by Stacy Rasgon wrote. The firm rates Intel as market perform with a stock price target of $21, suggesting about 12% downside from Thursday’s close of $23.86 per share. INTC 5D mountain INTC 5-day chart “Overall though the hope trade on Intel is probably back (for now) as investors wait to see if Trump can Make Intel Great Again,” Rasgon said. The problem is that Intel needs vision more than money, and it is not clear how the government can help with this, the analyst said. The chipmaker’s current roadmap to build five advanced manufacturing processes in four years is not going well, he added. “Without a solid process roadmap the entire exercise would be economically equivalent to simply setting 10s of billions of dollars on fire,” Rasgon said. “And there is unfortunately less that the US government can do directly to help with this.” The chipmaker could of course use the government’s money as it burns cash and suffers heavy losses from building out its manufacturing capacity, Rasgon said. But Intel ultimately needs customer commitments to support the capacity it is building, he said. Trump could press companies to buy Intel chips or assist indirectly with tariffs and regulation, the analyst said. But it is unclear how the economics of the Ohio plant will work if Trump forces its completion before a customer base is in place to support the capacity, he said. It is also unclear what Trump wants in return from Intel, the analyst noted. Uncle Sam will get a 15% cut from Nvidia’s and AMD’s China sales. The Defense Department will receive 30% of the upside above a price floor it has set for MP Materials’ sales of rare-earth oxides, after buying a big equity stake in the miner. “We will see whether Intel can get a better deal from him,” Rasgon said.
Read More: Could Trump make Intel great again? Bernstein has some doubts