Will getting into bed with Trump save Intel?
Commentary: Can Trump's stake-in steer Intel to recovery?
Monica Chen, Taipei; Elaine Chen, DIGITIMES Asia
Monday 18 August 2025
INTC
The Trump administration is in talks with Intel. The stakes? A direct equity investment in America's struggling chip giant.
Sources familiar with the discussions say this bold move could anchor Trump's push to revitalize domestic semiconductor manufacturing. It's part of a broader strategy to reassert American leadership in advanced technology.
But Intel faces a mountain of challenges. The company must fully separate its design and manufacturing operations. It needs tens of billions in funding. A foundry team must be rebuilt from scratch. Skilled engineers and operators are in short supply. And landing major client orders remains elusive.
Despite public support from the administration, industry insiders see government equity as one of the few viable solutions. The question: Can CEO Lip-Bu Tan execute what many consider an impossible turnaround?
There's potential relief on the funding front. Previously negotiated investment agreements with Japan, South Korea, and the European Union earmark hundreds of billions for US-controlled ventures. These deals could resolve Intel's immediate cash crunch. But money alone won't guarantee success.
How the mighty fell
Intel's downfall didn't happen overnight. It began more than 15 years ago with a series of devastating miscalculations.
The warning signs emerged in 2007. Apple launched the iPhone. The mobile revolution had begun. Intel missed it entirely.
Under CEOs Paul Otellini and Brian Krzanich, the company abandoned its engineering roots. Marketing became king. Innovation took a backseat.
The most damaging decision came in 2006. Apple offered Intel the chance to produce chips for the first iPhone. Intel declined. That "small" mobile market would eventually be worth trillions.
Meanwhile, rivals seized opportunities Intel ignored. Nvidia dominated AI and GPU innovation. AMD chipped away at market share. ASIC makers found their niche.
Intel still ruled PCs and servers through the 2010s. The numbers were impressive: over 80% of the PC market and nearly 100% of server space. But cracks were showing.
ARM-based challengers emerged by 2015. AMD's comeback gained momentum. Then came Intel's manufacturing nightmare.
The 10nm delays crippled everything. Intel's legendary "Tick-Tock" development cycle was shattered. EUV technology adoption lagged. The delays weren't resolved until 2019—far too late.
TSMC capitalized on Intel's stumbles. Apple's orders flowed to Taiwan. Profits funded cutting-edge nodes. TSMC's lead widened.
The final blow came from Apple itself. Once Intel's crown jewel customer, Apple walked away in 2020. The Apple Silicon initiative redirected all chip orders to TSMC. By 2025, the partnership was completely dead.
New leadership, same problems
Pat Gelsinger's return in 2021 sparked hope. His ambitious plans included the five-nodes-in-four-years (5N4Y) roadmap and the IDM 2.0 strategy. New fabs were planned across the US, Europe, and Southeast Asia.
The execution fell short. Board tensions escalated. Gelsinger's tenure ended abruptly. Lip-Bu Tan stepped in just months ago.
Now the Trump administration is preparing its next move. Direct investment appears likely. Joint ventures with major US tech firms are under consideration. A government-led stake in Intel's foundry unit could materialize.
Industry experts warn of massive complexity ahead. Foundry manufacturing demands differ drastically from fabless models. TSMC, already stretched by overseas expansion, won't help. Even consortium investments by Apple, Nvidia, and Qualcomm face serious obstacles.
Five mountains to climb
Intel's recovery hinges on conquering five critical challenges. Each one presents enormous hurdles.
- First: Complete separation of design and manufacturing divisions. This restructuring alone will take years.
- Second: Secure tens of billions in capital. Traditional funding sources have dried up.
- Third: Build a world-class foundry team. Current staff lack the necessary expertise.
- Fourth: Address the skilled labor shortage. Engineers and operators with advanced manufacturing experience are scarce and expensive.
- Fifth: Win major customer contracts. High-volume orders are essential for profitability.
Government ownership could provide a lifeline. But only if paired with flawless execution and unwavering long-term commitment.
Critics question the funding strategy. How can a debt-laden US government bankroll a five-year turnaround?
The answer may lie in foreign partnerships. Sources reveal that Japan pledged US$550 billion for US-controlled ventures. The EU committed $600 billion. Southern Europe added $350 billion. These agreements include provisions for Trump-directed oversight.
Such funds could anchor Intel's rescue package. But money without management excellence means nothing.
Behind-the-scenes drama
Political theater has complicated Intel's situation. President Trump's management style—equal parts carrot and stick—has created tension.
Trump initially demanded Lip-Bu Tan's resignation. Days later, he reversed course with public praise. Observers believe a tentative deal on restructuring and partial government ownership has already been struck.
Lip-Bu Tan now carries the burden of proof. His wafer fabrication experience offers hope. But leading Intel through its most dramatic transformation in decades requires more than technical knowledge.
The company's design arm continues losing market share. A pivot toward external foundry partnerships could restore competitiveness quickly. Success demands more than capital, though. It requires talent.
Building TSMC-level manufacturing capabilities means recruiting industry veterans. Proven experience matters. High-efficiency operators command premium salaries. Winning back major US customers won't happen overnight.
Limited options ahead
Some analysts float a merger with GlobalFoundries. Most dismiss the idea as wishful thinking. GF enjoys tariff protection and Abu Dhabi backing. Why risk a high-stakes gamble with Intel?
The synergies appear limited anyway. Two struggling entities rarely create one healthy company.
Intel remains a symbol of American semiconductor leadership despite its troubles. If Trump seriously wants to restore US chip dominance, Intel represents the only viable path forward.
But time is running out. Presidential terms last four years. Intel's window to capitalize on "Make America Manufacture Again" momentum is closing fast.
The choice is binary: capitalize now or fade into irrelevance forever.
Article edited by Jerry Chen
digitimes.com |
