The Trump Administration’s Stake in Intel: A Strategic Move Yielding Promising Results, Yet a Steep Ascent to Reclaim Industry Supremacy

The investment made by the Trump administration in Intel seems to be bearing fruit. However, the once – preeminent chipmaker has a substantial journey ahead to regain its dominant position within the industry.

Government – Backed Equity Injection and Earnings Surge

In August, the US government disclosed the conversion of approximately $9 billion in federal grants, initially issued to Intel during the Biden administration, into an approximate 10 percent equity stake in the company. During its third – quarter earnings report on Thursday – the first financial update since President Trump’s unexpected investment – Intel reported revenue of $13.7 billion over the past three months, marking a 3 percent year – over – year increase. This represents the fourth consecutive quarter in which Intel has exceeded revenue guidance.

Since finalizing the deal with the Trump administration over the summer, Intel’s stock price has surged by more than 90 percent. At the time of the deal, the company’s shares were trading at around $20. In the wake of today’s earnings report, its stock price had climbed to $38.16.

The Decision – Making Behind the Investment

Weeks after President Trump publicly demanded the resignation of CEO Lip – Bu Tan due to alleged controversial ties to China, the White House announced its investment in Intel. However, the president reversed his stance just days later, following what he described as a productive meeting with Tan.

During the earnings call, Tan expressed his “honor at the trust and confidence” bestowed upon him by Trump and Commerce Secretary Howard Lutnick. He further stated that Intel is “fully dedicated to the Trump administration’s vision and gladly welcomes the US as a crucial partner in our endeavors.”

Market Dynamics and Product Supply

Intel’s stronger – than – anticipated revenue indicates that global demand for x86 chips, the company’s specialty, is on the rise, fueled by the tech industry’s significant investment in AI infrastructure. While GPUs, such as Nvidia’s H100s, remain the benchmark for training AI models, data center construction involves a combination of GPUs and x86 CPUs, which power diverse AI workloads.

Intel noted during the earnings call that it has been unable to meet the demand of its device customers for older chips, which are less advanced than the latest AI semiconductors. This is partially attributed to the relatively weak consumer demand for AI – powered PCs, leading device manufacturers to seek older, more cost – effective chips.

Financial Performance and Cost – Cutting Measures

Intel also reported a net income of $4.1 billion, in contrast to losses exceeding $16 billion a year ago. Under Tan’s leadership, Intel has been vigorously implementing cost – cutting measures, including a 15 percent workforce reduction.

Recent Capital Infusions and New Facility Operations

The past few months have been eventful for Intel. In addition to the Trump administration, GPU behemoth Nvidia and multinational tech conglomerate Softbank have also invested in the company in exchange for common stock. In the most recent quarter, Intel received $5.7 billion from the US government, $5 billion from Nvidia, and $2 billion from Softbank. It also secured an additional $5.2 billion through the divestiture of stakes in chipmaker Altera and autonomous driving company Mobileye.

Earlier this month, Intel announced the operationalization of its high – tech chip fabrication plant, Fab 52, in Chandler, Arizona. The new chips produced at Fab 52, codenamed Panther Lake (for PCs) and Clearwater Forest (for data centers), will commence shipping in late 2023 and the first half of 2024, respectively.

Fab 52 manufactures CPUs using a new process, or node, that has the potential to rival Taiwan Semiconductor Manufacturing Company’s chip – making capabilities. However, TSMC produces advanced chips on a much larger scale, and Intel has yet to disclose the expected yields from Fab 52. During the call, Tan stated that “Intel 18A yields are progressing at a predictable rate at Fab 52 in Arizona,” without providing further details.

Future Outlook for Foundry Business

Analysts assert that Intel still needs to attract a major customer – or preferably multiple customers – for its foundry chips to further fortify its business and enhance its profit margins. Currently, the majority of chips produced in Intel’s new fabs are integrated into devices manufactured by its existing customers, such as HP, Dell, and Lenovo.

“On the foundry side, we are clearly engaging with multiple customers. To build customer trust, we need to demonstrate yield improvements, reliability, and provide all the necessary IP. It’s a service – oriented industry,” Tan remarked during the earnings call.