America, Incorporated: The Era of the Portfolio State

For much of the last century, the American state has intervened directly in the economy only in times of extraordinary crisis. During World War II, Washington commandeered entire industries to serve the war effort. In 2008, it took ownership stakes in banks, automakers, and insurers to stabilize the financial system. These interventions were temporary, emergency-driven, and designed to unwind once the immediate danger had passed.

For 40 years, American industrial policy was guided by market fundamentalism. The private sector was the engine of innovation, while the state served as a light-handed regulator and an enabler of globalization, providing market access for geopolitical alignment. Silicon Valley flourished. Capital moved freely. Manufacturing was offshored in pursuit of financial returns with Washington effectively outsourcing its industrial base to the invisible hand of the market. But that model has begun to crack. Recent events, such as the COVID-19 pandemic, the semiconductor shortage, and the rise of China as the techno-industrial superpower exposed America’s deep vulnerabilities. Chief among them is its lack of industrial scale in strategic sectors, areas where volume, speed, and competitiveness are required for national resilience and preserving a leading global position. This shortfall reflects a broader American tendency to assume that our perceived sense of technological superiority—which is already eroding vis-à-vis China—can compensate for material and industrial deficiencies, a belief at odds with industrial reality.

This is not the first time the United States has abandoned laissez-faire orthodoxy in favor of direct state intervention. During World War I, President Woodrow Wilson established the War Industries Board to coordinate the allocation of raw materials and standardize production to support the war efforts. The government nationalized railways and exerted control over telegraph networks to guarantee reliable transport and secure communication for the war efforts against Imperial Germany.

By World War II, Washington’s role was even more sweeping. President Theodore Roosevelt’s War Production Board converted entire sectors of the civilian economy to military use—automobile plants churned out tanks and aircraft, rubber and gasoline were rationed, and steel was funneled into shipbuilding. The government also imposed price controls and even nationalized industries such as coal mining when strikes threatened production. The United States became the “arsenal of democracy” by producing a massive amount of military goods. This extraordinary mobilization raised real GDP by 72 percent between 1940 and 1945, and at its peak, a large portion of U.S. economic activity was managed or steered by federal authorities to sustain the war effort.

In the late 1980s, facing competition from Japan’s semiconductor industry, the U.S. government and 14 tech companies formed a public-private consortium called SEMATECH. Funded by the Department of Defense and its members, SEMATECH’s goal was to improve U.S. semiconductor manufacturing, a collaboration that helped the United States regain its leadership position by the mid-1990s. And during the COVID-19 pandemic, the federal government intervened at an unprecedented scale. Through Operation Warp Speed, it directly funded the development and manufacturing of vaccines, and it also guaranteed airline payrolls, injected liquidity into markets, and authorized the Federal Reserve to purchase corporate bonds.

The through line is clear: when national security or systemic stability is at risk, the United States has never hesitated to use the full weight of the state to direct markets, sustain industries, or even seize assets in the name of the national interest. The difference today is not whether Washington intervenes, but how. First came export controls on advanced chips to China in October 2022. Then came the CHIPS and Science Act, allocating over $52 billion to subsidize semiconductor manufacturing. Next came targeted loan programs, tax credits, and partnerships for critical minerals. These steps reflected a strategy of de-risking—not full decoupling, but reducing dependence on China while restoring industrial sovereignty.

And now, under the Trump administration, there is a shift from subsidies to equity—from carrots to ownership. The United States is no longer just underwriting industry—it is becoming a shareholder in it. This marks the clearest break yet with the neoliberal consensus and the strongest signal that a new model is emerging—a model this piece will later define as the Portfolio State.

Intel once defined American semiconductor leadership. Under pioneers like Robert Noyce, Gordon Moore, and Andy Grove, the company invented the modern microchip, scaled it, and dominated global computing. By the 2000s, Intel’s dominance began to slip, largely due to a series of strategic miscalculations. The company missed the fundamental shift to mobile computing, as its chips weren’t designed to compete with the low-​power ARM architecture that powered the smartphone revolution. At the same time, it failed to recognize the emerging market for artificial intelligence (AI), allowing rivals like NVIDIA to become the leaders in specialized chips for AI data centers.

These setbacks were compounded by internal challenges. Intel fell behind in manufacturing, struggling with costly delays in developing its next-generation technology while competitors, such as Taiwan’s TSMC and South Korea’s Samsung, pulled ahead in advanced chip manufacturing. This shift was particularly dangerous as TSMC came to dominate an estimated 90 percent of the market for the most advanced AI chips. As the AI compute wave hits, the world’s dependency on these chips will only increase, making the need for a domestic alternative like Intel a top priority for national security. In a world where compute is foundational to technological supremacy, this was an unacceptable strategic liability. The Biden administration began with subsidies and procurement contracts, but the Trump administration went even further: it bought in.

This is why, in August, the U.S. government acquired approximately a 10 percent equity stake in Intel—an $8.9 billion investment funded by the remaining $5.7 billion in CHIPS Act grants and $3.2 billion from the Secure Enclave program. This investment is in addition to the $2.2 billion in CHIPS grants Intel has already received, bringing total federal support to $11.1 billion. This stake in Intel signals more than confidence in one company. It is the scaffolding for a new model of techno-industrial policy where the state doesn’t just fund innovation—it holds shares in it.

On the other side of the technology stack lies the raw material: rare earths. MP Materials operates the Mountain Pass mine in California. Rare earth elements are critical to everything from electric vehicles and wind turbines to precision-guided missiles and smartphones. Yet for decades, the United States ceded this sector to China, which now has a monopoly over global processing capacity. In February, the Department of Defense announced a $35 million cost-sharing agreement with MP Materials to design and build a facility to process heavy rare earth elements at the company’s Mountain Pass site in California. This partnership expanded even further: the Department of Defense is now MP Materials’ largest shareholder, holding a 15 percent stake in the company as part of a multibillion-dollar package to accelerate domestic magnet production.

What’s different this time is the logic. This is not just a loan or subsidy. It is a deliberate move to reassert sovereign control over a key input in the technology, defense and energy transition supply chains. In its own way, MP is the mining equivalent of Intel: a national asset operating in a strategic bottleneck. It is not hard to imagine a future where the U.S. government, or a coalition of industrial funds, acquires equity stakes in critical mineral producers.

What unites Intel and MP Materials is not sector or technology, but logic. The United States is no longer just subsidizing innovation but also building a portfolio of national assets—companies that sit at the apex of geoeconomic power. It is a Portfolio State: not a command economy in the Chinese mold, but a shareholder model in which public capital is deployed to achieve both commercial success and national interest. This new approach is finding a consensus between the populist left and the populist right. The Trump administration’s shift toward state intervention, most notably with the Intel deal, is being openly supported by progressives like Sen. Bernie Sanders, who had previously advocated for a similar approach as an amendment to the CHIPS Act.

Of course, industrial policy is not new to America, but the modern Portfolio State is different. It is shaped not only by geopolitical competition and techno-industrial urgency, but also by the growing influence of venture capitalist culture on American politics and, by extension, technology policy. As David Sacks put it when discussing the Intel deal, “if you are going to hand out billions of dollars to these companies, you’re better off at least again getting something for it, having the taxpayers have some upside in it, allowing the government to recoup and creating the right incentive for these companies.” That logic—placing bets, managing risk, and demanding returns—is straight out of Sand Hill Road.

Sacks made the point even sharper: “We don’t really want our companies going to the federal government to try and get bailed out. And at least if they have to give up equity or warrants, things like that, there’s a cost to it. We would rather that these companies get financed privately. But that didn’t happen here.” In other words, Washington is beginning to act like a venture capital firm by providing capital, but also demanding equity, and seeking geopolitical and commercial upside.

This shift is reinforced by personnel. Vice President JD Vance is a venture capitalist. Sriram Krishnan, a former Andreessen Horowitz partner, serves as an AI advisor in the Trump White House. The number of senior officials drawn directly from the venture capital ecosystem, or from its broader circle of influence, is unprecedented. Personnel is policy. And in this administration, the policy reflects the worldview of venture investors: scale fast, take equity, export your stack.

This logic is already visible in America’s AI Action Plan, which makes scaling and exporting the American AI stack the centerpiece of national strategy. Commercial success is now the core of America’s geopolitical position. Within this line of thinking, if American firms dominate the infrastructure and application layers of AI, then Washington can set the terms of global technological competition and its broader geopolitical position. In that sense, the United States is leveraging commerce itself as a geopolitical instrument.

That raises a larger question: If Washington acquires more and more equity stakes in companies, how should these stakes be managed? It makes little sense to allocate shares in Intel or future strategic firms on an ad hoc basis. Instead, to build a fully integrated model for this era of industrial policy, the United States should consider managing them through a sovereign wealth fund—one that aligns financial firepower with national priorities and blends commercial returns with strategic statecraft.

A U.S. sovereign wealth fund could institutionalize the Portfolio State and link investment flows directly to government priorities: AI, biotechnology, materials science, space, and energy technologies. Rather than treating each crisis as a one-off bailout, Washington could operate with foresight and discipline—turning public capital into a long-term lever of national strategy.

Intel and MP Materials are just the bookends of this emerging model. The U.S. government’s equity stake in these companies signals something deeper: America’s techno-industrial playbook, filtered through the grammar of venture capital and, potentially, the architecture of a sovereign wealth fund. This is the Portfolio State.

Mohammed Soliman is a Non-Resident Senior Fellow in the National Security Program at the Foreign Policy Research Institute. He is also the director of the Strategic Technologies and Cyber Security Program at the Middle East Institute and a visiting fellow with the National Security Program at Third Way. He can be found on X at @Thisissoliman.

This article appeared originally at Foreign Policy Research Institute (FPRI).