Inside Intel: how America’s chip champion came back from the brink

Intel’s chief financial officer, David Zinsner, was already navigating one of the most dramatic periods in the chip manufacturer’s history when he took a call from a US commerce department official in August last year. The federal government had just floated the idea of taking a 10 per cent stake in the chipmaker. But Zinsner was bluntly told that the structure of any transaction was not up for negotiation, according to an internal Intel memo recently unsealed in shareholder litigation, as well as sources close to the process. In order for the government’s stake to reach the 10 per cent demanded by US president Donald Trump, Intel would have to convert billions in manufacturing grants advanced under the 2022 Chips Act, plus $3.2 billion (€2.77 billion) of contracts from the Department of Defense, into equity. Its board initially balked at converting the defence contracts. But, two days later, it acquiesced and the biggest federal equity intervention in a US company since the bailout of General Motors in 2009 was completed.READ MOREThe group that once dominated the market for PC and data centre chips, had invested more than $30 billion in its campus in Leixlip, Co Kildare, since 1989, and was still the only US-based company capable of making the most advanced chips, had been saved from a possible break-up. The world’s chip consumers, wary of the over-concentration of manufacturing capacity within Taiwan’s TSMC – which makes more than 90 per cent of the world’s most sophisticated chips, including those used in the booming AI sector – now have at least the prospect of a credible alternative supplier.Since the government stepped in, Intel has pulled in $5 billion of investment from Nvidia and $2 billion from Japan’s SoftBank and its shares have more than quadrupled, trouncing those of rivals. While the deal divided opinion in the semiconductor industry, it has definitely reversed the narrative of decline.But company insiders, industry sources and analysts say the alliance with the Trump administration alone will not be enough.Now, Intel’s chief executive, Lip-Bu Tan – whom Trump once said should resign because of his prior Chinese chip investments – must complete a turnaround that, until recently, some analysts thought might not be possible. A view of Fab 34 at Intel's campus in Leixlip, Co Kildare. Photograph: Alan Betson / The Irish Times The seeds of Intel’s turnaround were planted several months before the Trump administration stepped in. When Tan became chief executive in March last year, he spent his first weekends summoning colleagues to his home in Silicon Valley to brief him on every aspect of the business. He took copious notes but said little, according to people familiar with the events of those early weeks. The picture they set out was bleak. Intel’s revenue was flatlining as the company faced competitive pressure from AMD in its low-growth PC and data centre chip business. In 2024, the year Tan’s predecessor Pat Gelsinger was ousted, the company had racked up $18.8 billion of losses.Its strategy of building powerful AI processor chips that could compete with those of Nvidia was in disarray. A critical deal with Arm, which would have seen the SoftBank-backed group use Intel’s foundry to manufacture its new AI data centre chip, had fallen through, according to two people familiar with the talks. Both Arm and Intel declined to comment.The agreement would have required additional capital investment from Intel at a time when spending was already surging. Arm, which like many in the sector is a “fabless” designer of chips rather than a manufacturer, was also concerned that Intel’s processes were not competitive enough at that time, the sources say. It ultimately released the chip earlier this year – with TSMC looking after production. They still thought they were the old Intel where everything was on their terms— G Dan HutchesonGelsinger’s fateful 2021 decision to spend tens of billions of dollars on new foundries to assemble chips for other companies had faltered, as customers failed to materialise quickly enough to justify the investment. The development of its latest generation of manufacturing technology to compete with TSMC, known as 18A, had also taken longer than expected.“They still thought they were the old Intel where everything was on their terms,” says G Dan Hutcheson, vice-chair at market intelligence firm TechInsights. “They had all these layers that create waste, with managers managing managers ... The decision time had slowed to a grind.”As Intel’s market capitalisation slipped below $100 billion, potential buyers like Qualcomm and Broadcom were eyeing pieces of its business.Tan’s diagnosis was that if the new Intel Foundry business for outside customers was to survive, it needed radical streamlining and new management that could reset the relationship with prospective customers and reboot the company’s engineering culture. He moved quickly, cutting more than 20,000 jobs, or about a fifth of group headcount, in just six months. To shore up the balance sheet, he pared back capital spending and sold stakes in Altera and Mobileye for a combined $5.2 billion. Company insiders describe Tan, who also founded venture firm Walden International and was previously chief executive of chip design software company Cadence, as well connected but difficult to read. “There was an element of, ‘What the hell is this guy thinking?’” says one. “I think he didn’t trust a lot of the management team.” Zinsner and Naga Chandrasekaran, who now runs the foundry operation and has been given broad freedom to reshape it, are the only top-level survivors from the team Tan inherited. He brought in two former Cadence colleagues, Srinivasan Iyengar and James Chew, to lead its central engineering and government technology groups. Senior Arm executive Kevork Kechichian was appointed to lead Intel’s data centre business.Lip-Bu Tan, chief executive officer of Intel, during a news conference in Taipei, Taiwan in 2025. Photographer: Annabelle Chih/Bloomberg via Getty Images Tan was still in the middle of reshaping his team in August last year when Trump issued his call for the “highly conflicted” chief executive to resign, seemingly after viewing news reports about Republican Senator Tom Cotton’s criticism of Tan’s investment connections to China.Intel requested a meeting with the administration, and after spending a weekend mapping out all the potential outcomes, Tan sat down with Trump, commerce secretary Howard Lutnick and Treasury secretary Scott Bessent, according to multiple sources familiar with the events of that week. The Malaysia-born executive’s key task was to persuade the administration that he was both a patriotic American and the only person capable of turning around the fortunes of the national chip-manufacturing champion.“That meeting had to go well. We believed there was a fair chance that it would,” says one company insider. “But you have to be prepared for a variety of outcomes.”For some, the equity deal with the administration was a brilliant example of a chief executive turning crisis into opportunity.The transaction included punitive terms to deter Intel from abandoning its foundry business but also sent the message to prospective customers and suppliers that, for the next two years at least, Washington has the company’s back.[ Electric vehicles the driving force behind new car sales in JulyOpens in new window ]For others, it was an outrageous move by the administration. “There’s no legal statutory authority for the Intel equity stake,” says one industry insider. “It’s a completely unprecedented, horrible policy. And [other] companies don’t want to go in and meet with Trump, because they are afraid he is going to shake them down.”White House spokesman Kush Desai said that the administration was “focused on reshoring critical supply chains and safeguarding our national and economic security – all while ensuring the best bargain for taxpayers in every deal”.By the time he walked into the Oval Office, Tan had already warned publicly that Intel could abandon its newest manufacturing process, known as 14A.Such a move would have signalled the end of its ambitions to continue competing with TSMC in the most advanced areas of contract chip manufacturing.He had deduced that the volume of chips Intel produced alone would never be worth the mounting costs of building and maintaining a leading foundry. His logic had a historical echo: rival AMD had divested its foundry in 2008 as it slipped into financial crisis. Intel had spent the past decade falling behind TSMC’s manufacturing processes, with the likes of Apple, Nvidia, AMD and Qualcomm all relying on the Taiwanese giant to build their full suite of products. It had never attempted large-scale manufacturing for outside customers before it opened its foundry in 2021. Building trust with customers required time Intel did not have, especially given its subsequent financial and technological difficulties.US president Donald Trump. Photograph: Anna Moneymaker/Getty Images Since the US government stepped in, Intel has opened talks to multiple customers about using its foundry, and last month moved to increase capital spending from $18 billion to $20 billion this year – suggesting it expects to win new customers. At the start of this year Intel began making some of its own leading PC and server chips at its new facility in Arizona, a sign of growing confidence in its advanced manufacturing capability after enduring the humiliation five years previously of asking TSMC to make some of its most advanced designs.Tan has since confirmed the company is fully committed to 14A, something he said he would not do without confidence they would bring outside customers. A partnership with Elon Musk in his futuristic Terafab project – an ambitious plan to build a giant chipmaking facility in the US, producing a range of semiconductors and bypassing Asia-based suppliers – also lifted Intel’s shares, despite the vague nature of the venture. Apple, one of the world’s largest consumers of chips, is testing Intel’s processes with an eye to having it build some of its older M series laptop chips. Trump said on Truth Social in June that Apple had “agreed to work with Intel to design and build its chips in America”, prompting gains in Intel shares but no confirmation from either company. Tan has also enhanced Intel’s credibility as a partner, drawing on his wide business network and experience with Cadence, whose chip design tools reach across the semiconductor space. Company insiders describe the contrast between Tan, who is focused on execution and tends to under-promise with the aim of over-delivering, and Gelsinger, who was known for his aggressive optimism. But Tan cannot yet offer indisputable evidence that Intel has matched TSMC’s manufacturing technology, which would make the heavy investment required to adopt a second supplier more viable for potential customers.[ How can I avoid a family row over what happens to my home when I die?Opens in new window ]One industry source says Intel’s current 18A technology, while improving, is not yet equal to TSMC’s. “Tan talks about the fact that [Intel’s 18A] is ramping ... What he doesn’t talk about is how competitive it is in terms of performance and power area versus its equivalent TSMC namesake,” the source adds. Intel never discloses specific technical details about current manufacturing technology, such as its yield – the percentage of chips coming off a production line that meet quality control tests.Tan has said that 18A’s successor, 14A, is progressing faster than 18A was at the same stage of development. The October release of 14A’s latest development kit, which provides designs for the manufacturing process, will help determine whether customers commit to mass production, say analysts.For large chip design companies in a tight market, committing to Intel involves not only heavy investment but the risk of upsetting TSMC, whose precious capacity they still need. “People don’t want to piss off TSMC because there is a capacity crunch,” says one company insider. “Everyone is in a fight for wafers, and that gives TSMC a tremendous amount of leverage.”ATSMC chip factory in Hsinchu, Taiwan. Photograph: Lam Yik Fei/The New York Times Timothy Arcuri, who leads semiconductor coverage at investment bank UBS, says that “you definitely have to tread carefully if you are going to engage with Intel ... but you can slow-walk your way into it”.He says Apple is unlikely to see much disruption to its relationship with TSMC by sending limited volumes of older-generation chips Intel’s way – even though that would still amount to billions of dollars of additional revenue for the latter.The same logic applies to Intel’s chip-packaging business, which encases wafer dies into finished packages. It offers a fraction of the revenue that comes from actually making chips but can help build the trust Tan wants to establish.In May, Taiwan’s MediaTek was the first customer to publicly announce it was using both Intel and TSMC’s packaging technology, and Intel’s new facility in New Mexico is one of the rare sites where Tan accelerated investment from the start. “Intel has had this great packaging advantage that they never used,” says TechInsights’ Hutcheson, because they wanted to focus on the high-risk, high-reward fabrication business.“It was like the story of Custer not taking the Gatling guns with him because he didn’t want to be slowed down,” he says, referring to a famous defeat inflicted on the US Army by Native Americans in 1876.Alongside the effort to match TSMC in the foundry business, Tan has worked to rationalise Intel’s AI chip division, where products intended to compete with Nvidia have either failed or been shelved. Tan has branched into the business of designing custom chips alongside customers, after shares in fabless chipmakers Broadcom and Marvell rose following their work with AI hyperscalers such as Microsoft, Amazon and Google. Intel announced its own deal with Google in April. The company has benefited from rising demand for its central processing units, such as the Clearwater Forest chip launched in June, which can be used for managing AI workloads in data centres.“These are going to be low share, but in big markets. Lip-Bu doesn’t need much share to add multiple billions of revenue,” says Arcuri at UBS.The key, he adds, is to shift the perception of Intel from a company that dominates low-growth chip markets, such as PCs and servers, to one that is grabbing a small but significant share of the more dynamic AI infrastructure market.The response to an AI accelerator chip Intel plans to launch by the end of this year will be another “wait-and-see” factor in its comeback. As the PC market contracts amid a prolonged shortage of memory chips, the success of AI-related products becomes all the more critical. For now, however, investors seem inclined to show faith in the company, which announced an equity raise of $20 billion this week. “What [Tan] is really good at is knowing how to talk to the investment community,” says one industry insider.“He’s done a remarkable job driving up the stock. The hard part is that he still has to deliver.” – Copyright The Financial Times Limited 2026