The Pentagon is thinking about buying U.S. stakes in the defense business. Who might be affected?

U.S. Defense Department officials are "pondering" whether the U.S. should acquire equity stakes in leading defense contractors such as Lockheed Martin, Commerce Secretary Howard Lutnick said. Shares of the defense company rose 2% afterward. The statement came as the U.S. government converted grants to Intel into a 10% stake in the company, making it its largest shareholder.

The U.S. Department of Defense is interested in acquiring shares in defense companies such as Lockheed Martin, Commerce Secretary Howard Lutnick said on CNBC. He said this in response to a question about whether the government plans to repeat the experience of getting a stake in Intel with other companies.

"Oh, there's a monster defense debate going on right now," Latnick said. He said Lockheed, which gets most of its revenue from federal contracts, is "essentially an extension of the U.S. government."

"But what is the economic sense here? I leave that up to the secretary of defense and the deputy secretary of defense," Latnick added. - These guys are looking into it and mulling it over."

The Commerce Secretary also noted that U.S. President Donald Trump is rethinking his approach to funding the country's weapons and other defense capabilities.

"I'll tell you: the way it was done before - it was just a gift [to private companies]," Lutnick argues.

The announcement may indicate that the Trump administration is considering a major overhaul of the Pentagon's funding system, which is approved annually by Congress, CNBC said.

"As we did in his first term, we continue our close partnership with President Trump and his administration to strengthen national defense," a Lockheed spokesperson told CNBC in a commentary. The Pentagon did not respond to the network's request for comment.

Lockheed shares were up 2% to $456.4 at one point in Tuesday trading, but then the gains slowed to about 1.5%. They are down more than 6% since the beginning of the year.

Lockheed is the world's largest defense company by revenue, according to DefenseNews' 2024 rankings. Other major U.S. contractors are RTX, Northrop Grumman, General Dynamics and Boeing. Their stocks were also up between 1-2% on Tuesday.

Last week, the U.S. government expressed interest in acquiring a stake in the struggling semiconductor company Intel, and then Reuters sources reported that it may also talk about acquiring stakes in other semiconductor companies. Representatives of Donald Trump's administration have not previously announced any interest in defense stocks.

The Intel stake will be acquired by the U.S. government using $5.7 billion in grants not yet awarded to the company under Joe Biden's CHIPS Act (government support for chipmakers developing manufacturing in the U.S.), as well as $3.2 billion allocated for the Secure Enclave program (a subprogram of CHIPS, but with other funding sources), which was also initiated by the previous White House administration.

Trump's move to acquire a stake in Intel was part of his efforts to achieve his economic goals by expanding government control over the private sector, CNBC explains. Trump said on Aug. 25 that he was willing to make such deals "all day long."

But the move has drawn sharp criticism, including from some conservatives who warn that Trump's actions go against free-market principles and carry risks for both Intel and the economy as a whole, CNBC writes. Intel itself has warned of the risks associated with the acquisition of the stake by the government. In particular, Intel worries that the participation of the United States as the company's largest shareholder will threaten the overseas business, which brings the chipmaker 76% of revenue.

"The most obvious risk is that Intel's decisions will increasingly be driven by politics rather than commercial considerations," economist Scott Lincisome of the Cato Institute wrote in a column for The Washington Post.

This article was AI-translated and verified by a human editor