| | | Intel Has Lots of Problems. A U.S. Stake Won’t Help.
By Adam Levine
Updated Aug 22, 2025, 6:11 pm EDT / Original Aug 22, 2025, 2:30 am EDT
Lip-Bu Tan, CEO of Intel, leaves the White House on Aug. 11. (Alex Wroblewski/Bloomberg)
It has been a wild ride for Intel over the past few weeks. Eight times the stock has seen a one-day move of plus or minus 3%.
The volatility stems from all of the issues roiling markets these days: geopolitics, trade, artificial intelligence, U.S. industrial policy, and a micromanaging executive branch.
In Intel’s case, everything is amplified by a decadelong struggle with technology.
The headlines whipping the stock have focused on Intel’s financing, but money alone won’t solve the company’s problems, which are rooted in manufacturing.
Those challenges have led to turnover in Intel’s executive suite, undermining a well-respected longtime engineer in Pat Gelsinger, who stepped down in December after failing to mount a turnaround.
The new CEO, Lip-Bu Tan, has limited options and time to fix the situation. On Aug. 7, President Donald Trump kicked off the latest round of Intel’s stock volatility when he wrote on social media, “The CEO of INTEL is highly CONFLICTED and must resign, immediately. There is no other solution to this problem.” Intel shares declined more than 3% that day.
But another solution emerged after Tan visited the White House to gain the president’s favor. On Aug. 11, Trump wrote
on Truth Social, “Mr. Tan and my Cabinet members are going to spend time together, and bring suggestions to me during the next week.” Intel stock was up more than 3% that day.
This launched two weeks of stories surrounding Intel’s financing through the U.S. Chips Act and private investors. Late Friday, Intel agreed to a deal in which the U.S. government gets a 9.9% stake in the company, in return for fulfilling its full payout under the U.S. Chips Act, a total of $11.1 billion.
The law passed by Congress and signed by President Joe Biden in 2022 never called for equity stakes for that funding. But political dynamics have shifted. Sen. Bernie Sanders (Ind., Vt.), a self-described democratic socialist, had called for the government to receive equity
in exchange for funding, but his policy wasn’t included in the final legislation.
The Biden administration granted Intel $11.1 billion from the Chips Act, spread over five projects, including a $3.2 billion special contract with the U.S. Department of Defense. The grants were disbursed based on capital investment progress. Intel had received only $2.2 billion, leaving most of it up for grabs. What had been free to Intel now comes with a heavy price.
To complicate matters, on Monday Intel and SoftBank Group announced a $2 billion cash infusion
in exchange for about 2% of Intel, another seemingly dilutive deal. The price of $23 per share is a small discount to Intel’s closing price earlier that day. On Wednesday, CNBC reported
that Intel is seeking similar deals at discounted share prices with other private investors.
Intel needs this funding. At the end of June, the company had $21 billion in cash and short-term investments. On the other side of the ledger, subtracting capital expenditures from operational cash flows, Intel lost $45 billion over the past 3½ years, $6 billion of that in 2025. New financing is crucial, but it won’t be enough to get Intel back into the lead.
As of Friday, the stock is down 64% since its last peak in early 2020.
It’s tempting to look at the decline and see a cheap stock. Indeed, the stock trades right around its book value, which means that investors don’t think it’s worth more than what’s on the balance sheet—assets minus liabilities. Back in 2020, Intel traded at 3.8 times book value.
A rebound would probably provide a giant windfall for shareholders. But Intel has been trying to right the ship for four years, and in 2025 it doesn’t seem any closer to success.
In 2021, with the company already in crisis, new CEO Pat Gelsinger announced an ambitious plan to launch five new manufacturing processes in four years, an unheard-of pace. The goal was to get Intel’s technology back on track quickly after it had lost leadership to Taiwan Semiconductor Manufacturing and, like Taiwan Semi, provide service to outside customers.
So far, only the first of these five “nodes” can be considered a success, having made five different lines of Intel chips from 2021 to 2023. There have been three subsequent nodes, and each was a different sort of failure, allowing Intel’s main competitor, Advanced Micro Devices, to surpass its technology. AMD uses Taiwan Semiconductor to manufacture its chips.
The third of the five nodes was meant to launch Intel as a manufacturer for other chip companies. That didn’t happen, and it was used only sparsely by Intel. The fourth node was supposed to feature Qualcomm as the launch customer, but that went nowhere, and the node looks to have been scrapped.
In the first half of 2025, Intel has earned $53 million from outside customers for its manufacturing segment, which featured an operating loss of $5.5 billion.
While Tan has said that the fifth of the five nodes will make three generations of Intel chips, the company’s foundry still doesn’t have a large external customer. Intel hit its four-nodes-in-five years timeline, but only the first node, and maybe the fifth, have proved to be very useful.
Since 2021, Intel has spent over $100 billion building these nodes, with little to show for it.
Sure enough, Tan has a new approach. Instead of his predecessor’s “build it and they will come” attitude, he is essentially saying, we’ll build it, if they come.
Now, it’s a question of who shows up.
Write to Adam Levine at adam.levine@barrons.com |
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