America’s geopolitical future more and more hinges on non-public know-how, and companies wield affect as soon as reserved for nation-states. Few instances higher illustrate the dangers of outdated governance requirements than Intel—as soon as a nationwide champion, now on the middle of a high-stakes world competitors. However with that affect has come a troubling development: strategic selections by company boards that prioritize short-term revenue and worldwide entanglements over long-term nationwide safety.
Intel’s current trajectory, spotlighted by Sen. Tom Cotton’s letter to the corporate’s board chair earlier this week questioning CEO Lip-Bu Tan’s ties to China and the administration’s subsequent name for his removing, is a placing instance. The corporate’s authorized however in depth investments in China spotlight how outdated U.S. company governance requirements have did not adapt to the trendy period.
Intel’s strategic missteps and board complicity
Intel, as soon as a frontrunner of America’s semiconductor business, was granted $19.5 billion via the CHIPS and Science Act, a program geared toward revitalizing home chip manufacturing. In 1990, the U.S. produced almost 40 % of the world’s semiconductors. At the moment, that quantity has dropped beneath 12 %, and not one of the most superior chips are made domestically. Taiwan manufactures greater than 60 % of the worldwide provide and over 90 % of cutting-edge chips. Intel was positioned to reverse this development, however a collection of strategic missteps, compounded by deepening ties to China, undermined that potential.
Regardless of the CHIPS Act’s steerage discouraging such exercise, Intel’s enterprise arm directed capital into at the least 43 Chinese language A.I. and semiconductor startups, greater than some other U.S. agency, as first reported by Future Union. On the identical time, Intel has invested greater than $1.5 billion into Tsinghua College, a top-ranked technical college thought of Beijing’s equal of MIT and intently tied to the Folks’s Liberation Military and the Chinese language Communist Social gathering, counting alumni that embody Chairman Xi. Regardless of the dangers of know-how switch and IP theft, Intel maintained its relationship with Tsinghua, conscious of its position in advancing China’s army capabilities. Its subsidiary, Intel China Analysis, continues to run A.I. initiatives in Shenzhen, a identified hub for army know-how.
These selections weren’t oversights. They have been board-approved methods. Intel’s board contains figures like Lip-Bu Tan and Jim Goetz, who’re related to enterprise companies Walden Worldwide and Sequoia Capital, respectively—each named by the Home Choose Committee on the Chinese language Communist Social gathering as facilitators of know-how transfers to China, lots of which function adjoining to China’s army ambitions. One other director, Risa Lavizzo-Mourey, led the Robert Wooden Johnson Basis, which collectively made greater than 55 China-linked investments, per Future Union’s Rubicon report. A Reuters investigation with Future Union discovered that Intel’s board member and CEO, Lip-Bu Tan, had minority funding in over 600 Chinese language startups between 2012 and 2024, together with 40 control-level pursuits, eight with hyperlinks to the Folks’s Liberation Military. It stays unclear whether or not these holdings have been disclosed to Intel or its board, however they underscore the necessity for clearer guidelines and heightened requirements round board member conflicts.
Intel’s business dependence on China additional illustrates the dangers. In 2024, the corporate derived 29 % of its world income from China, with pc maker Lenovo accounting for 12 %. That very same yr, Intel laid off 15,000 staff, suspended dividends and lobbied Congress to ease funding restrictions. In keeping with Politico, this lobbying effort discovered an ally within the Treasury division—extensively seen as a roadblock to more durable controls—the place Secretary Janet Yellen’s chief of workers was married to Intel’s head of presidency affairs. The outcome was a taxpayer-funded enterprise leveraging its affect to withstand the very safeguards designed to strengthen U.S. business. This was not market-driven adventurism. This was a sponsored give up.
Delaware’s fiduciary duties: a short-term focus
Company boards are supposed to safeguard long-term worth, however that relies on their independence. In lots of main tech corporations, together with Alphabet, CrowdStrike, Lyft, Meta and Zoom, supermajority voting guidelines and dual-class share constructions focus energy within the palms of CEOs and restrict the board’s potential to offer significant oversight. This contains the authority to take away management. These realities undermine confidence in a board’s position as a verify on government energy. Intel’s selections replicate how such weaknesses in company governance can erode America’s technological management.
For instance, 39 % of Fortune 500 CEOs serve lower than 5 years, and the typical C-suite tenure is 4.6 years, in response to recruiting agency Spencer Stuart. This reinforces a tradition of “short-termism,” the place selections are guided by quick monetary outcomes and government bonus incentives, fairly than long-term worth. When management modifications continuously, the implications of technological decline or strategic missteps are foisted on their successor. Boards, whose tenures typically mirror these of CEOs and function below dual-class share constructions and supermajority voting guidelines, continuously lack the independence or incentive to intervene. The result’s the façade of true board independence with out substance.
Delaware legislation, which governs most U.S. public corporations, helps this dynamic. Fiduciary duties are narrowly outlined: boards are anticipated to maximise shareholder worth, usually within the shortest attainable timeframe, leaving long-term competitiveness secondary to short-term income. The Revlon doctrine enshrines this commonplace, requiring administrators to prioritize the best quick return, no matter longer-term dangers. Administrators bear no specific obligation to think about nationwide safety or shield U.S. strategic applied sciences.
In 2016, AMD structured a three way partnership to switch its most superior semiconductor to China, evading CFIUS evaluate, in change for upfront funds. Whereas authorized, the deal gave China a strategic foothold in chip manufacturing on the expense of U.S. management. Administrators bear no specific obligation to guard America’s strategic applied sciences from adversarial regimes. This sort of authorized loophole permits company boards to sideline nationwide safety in pursuit of quarterly earnings, successfully sanctioning financial self-sabotage.
Thus, Intel’s case just isn’t distinctive. These dynamics reward expediency and self-interest over stewardship. And that can stay within the absence of latest fiduciary concerns.
Broader situations of know-how transfers below duress
China has lengthy leveraged world capital markets not simply to generate monetary returns however as a strategic software to entry international mental property. Whereas many Chinese language buyers current themselves as commercially motivated, quite a few instances have raised considerations in regards to the unauthorized switch of delicate applied sciences. Smaller companies and startups, typically unaware of the geopolitical implications, are significantly inclined to such ploys throughout due diligence or partnership discussions, contributing to the decline of once-promising companies.
The problem for bigger, publicly traded know-how corporations takes a unique type. China has leveraged the structural weaknesses in company governance, significantly stress on executives to ship short-term outcomes. By joint ventures or market entry necessities, U.S. companies have at instances agreed to share proprietary know-how in change for continued entry to the Chinese language market. This follow, generally known as “pressured know-how switch,” has been criticized by the U.S. Commerce Consultant and European business teams, which report that corporations working in China have confronted “irreparable hurt.”
This follow is an ordinary characteristic of China’s industrial coverage playbook. In sector after sector—biotech, cloud computing, semiconductors—U.S. companies have accepted phrases that many argue endanger nationwide competitiveness. The sample is constant: below stress to realize short-term targets, boards and executives greenlight offers that erode long-term technological edge and, by extension, nationwide safety pursuits.
And it’s not restricted to Intel. A large swath of U.S. know-how corporations, from Apple and IBM to Ford, Tesla, Eli Lilly, Johnson & Johnson, Qualcomm and AMD, have confronted the identical mandate: share core IP or lose market entry. In lots of instances, the selection has been clear, and compliance has come at a strategic price.
The case for a brand new governance paradigm
The judiciary crafted America’s outdated Revlon commonplace of evaluate in a unique period, ignoring at this time’s geopolitical actuality. Multinational companies in sectors like semiconductors, synthetic intelligence, quantum computing and biotechnology are inherently geopolitical actors whose selections form nationwide energy. A brand new governance paradigm would entail:
- Incorporate nationwide safety into fiduciary obligations: Boards in strategic sectors like semiconductors, A.I., quantum computing and biotech needs to be required to think about geopolitical dangers when evaluating international partnerships and know-how transfers, particularly when public funding is concerned.
- Restrict conflicted board memberships: Administrators with substantial investments or institutional affiliations in adversarial nations needs to be prohibited from serving on boards of corporations working in crucial industries, ideally eliminating conflicts of curiosity.
- Strengthen oversight for federally sponsored corporations: Companies receiving vital federal subsidies above a sure threshold needs to be topic to unbiased nationwide safety audits and pre-deal critiques of international partnerships. International partnerships needs to be disclosed and reviewed—earlier than they’re signed.
- Set up private legal responsibility for administrators: Much like present cybersecurity accountability requirements, administrators ought to face penalties for selections that endanger technological sovereignty. In instances of gross negligence or willful oversight resulting in vital IP loss, a director may forfeit inventory awards or bonuses.
- Create know-how and safety committees: Corporations ought to set up standing subcommittees, much like these required by the SEC or for inventory change listings in key industries, centered on cybersecurity, mental property safety, nationwide safety exposures and international affect threat.
- Set up a authorities oversight physique: A everlasting, nonpartisan oversight mechanism, shielded from political and company affect, may evaluate company selections with potential nationwide safety implications and guarantee constant enforcement of fiduciary requirements.
In the course of the Chilly Battle, buying and selling secrets and techniques with adversaries sparked nationwide outrage. At the moment, boards like Intel’s can do one thing comparable with out breaking a single legislation. That’s exactly the issue: our company governance requirements haven’t caught up with actuality. A crucial loophole permits administrators to disregard nationwide safety whereas chasing quarterly returns.
These requirements ignore the stakes of contemporary technological competitors—significantly in foundational, “stacking” applied sciences like A.I.—and relegate long-term safety to an afterthought. Intel’s current selections characterize a voluntary give up of America’s technological edge, facilitated by outdated governance frameworks designed for a unique period.
We now stay in a world the place capital strikes sooner than regulation, and personal companies form nationwide destinies. Intel’s management made China a fixture of its long-term technique with the backing of American taxpayers. That isn’t a failure of coverage. It’s a failure of governance. Intel’s instance demonstrates the pressing have to modernize fiduciary obligations. Patriotism can’t be legislated. However we are able to, and should, mandate accountability.
