Lawmakers and Wall Street analysts are increasingly concerned about Intel’s ability to regain its footing as a top chipmaker. Intel’s struggles, marked by substantial stock drops and operational setbacks, include losing its 25-year spot on the Dow Jones Industrial Average to Nvidia and facing billions in losses. Despite this, Intel remains the only U.S.-based manufacturer producing high-powered chips at scale—a critical factor in maintaining America’s technological independence. Policymakers are hopeful that Intel’s fortunes will improve with funding from the CHIPS Act, aimed at boosting domestic semiconductor manufacturing. However, Intel’s road to recovery depends on several high-stakes initiatives and significant governmental support.
Key Strategic Moves for Intel’s Comeback
- Technological Innovation with 18A Process: Intel’s success heavily relies on the 18A process technology, its next-generation node. If Intel can achieve timely execution, it could attract more clients to its foundry business, as evidenced by a recent partnership with Amazon. Industry analysts note that catching up with Taiwan Semiconductor Manufacturing Company (TSMC) is crucial, and Intel is pouring resources into its technology to compete.
- Intel Foundry Business Spin-Off: Intel’s plan to separate its manufacturing operations into an independent Intel Foundry subsidiary could potentially reshape the company. The foundry’s viability hinges on securing significant orders from competitors and rivals, who currently rely on TSMC for production. This separation could also drive valuation; Intel’s foundry business alone is estimated to be worth $80 billion, according to industry analysts.
- Cost Control and Asset Liquidation: CEO Pat Gelsinger has recently led cost-cutting measures, including layoffs and real estate sales, to manage Intel’s finances. While Intel is unlikely to reach bankruptcy, keeping costs in check is essential for future investments in its high-stakes projects. Analysts note that while Intel holds a 75% market share in data center chips and PCs, the pressure to deliver cutting-edge advancements remains high.
- Federal Funding and Partnerships: The U.S. government sees Intel as integral to maintaining a competitive tech landscape. Through the CHIPS Act, Intel is set to receive federal funding to strengthen U.S. chipmaking capabilities, although the funds are yet to be disbursed. Commerce Secretary Gina Raimondo has also reportedly encouraged tech giants like Google, Apple, and Microsoft to purchase Intel’s chips, potentially strengthening Intel’s role in domestic manufacturing.
- Possible Merger or Restructuring: If Intel’s foundry strategy fails, or if losses escalate, the company may face restructuring or acquisition. Rumors of potential mergers with companies like AMD or Marvell have surfaced, and some policymakers have discussed contingency plans to keep Intel viable if its foundry ambitions stall. A breakup could involve spinning off the foundry as a separate entity or bringing private investors onboard.
As Intel navigates these strategic paths, its success in managing costs, technology innovations, and securing government support will determine whether it regains its leadership in the semiconductor industry. While the U.S. government’s backing provides a safety net, Intel must deliver consistent advancements to prove it can still compete on the global stage.
