2025 is an eventful year for Intel (INTC), but it doesn’t necessarily change its narrative.
The storied American chipmaker has a new CEO and has won huge investments from the U.S. government, Nvidia (NVDA) and SoftBank (SFTBY). Those developments have helped the stock rise more than 80% so far this year, ahead of gains among the “Big Seven” big tech stocks and Intel rival Advanced Micro Devices (AMD). Meanwhile, Intel’s key manufacturing unit still lacks major outside customers — the kind it needs to make its cash-draining business viable.
Morningstar analyst Brian Colello told Yahoo Finance: “Intel ended the year with some optimism that they would become a relevant chipmaker in the U.S. at some point… This was definitely an uncertain statement at the beginning of the year.”
At the same time, he noted, “there haven’t been any large-scale deals that really gave Intel a foothold in manufacturing.”
The company’s technologies were largely responsible for the digital revolution and Silicon Valley’s reputation as a global center of innovation: Intel invented the world’s first microprocessor, or computer chip, and the x86 architecture, a key blueprint for designing computer chips. Its co-founder Gordon Moore created Moore’s Law, which has defined the pace of innovation in the semiconductor industry for more than half a century. The company continues to produce its own computer chips even as other companies in the industry have gone “fabless” – outsourcing manufacturing to companies such as Taiwan Semiconductor Manufacturing Company (TSM).
But years of missteps and poor investment decisions have left Intel’s manufacturing arm lagging behind that of TSMC, which in turn has caused its products to lose their edge over rivals. Its manufacturing business has lost the scale it needs to survive as its chips – the CPUs that power servers, laptops and desktops – lose market share to rivals AMD and Arm (ARM).
Former CEO Pat Gelsinger’s four-year aggressive turnaround effort to revive Intel’s manufacturing division by opening it up to outside customers caused investors to flee. The huge expenditure required to restart the foundry and the uncertainty about whether it will succeed have alarmed Wall Street.
Lip-Bu Tan was appointed CEO in March after the board ousted Gelsinger at the end of 2024, and his arrival began to reignite confidence in the company’s potential turnaround. Analysts explained that while Intel’s strategy under Amy Tan has remained largely unchanged, investors have appreciated his calm tone, cost-cutting measures and extensive industry connections.
That tepid confidence turned to confidence when the U.S. government made a rare $9 billion investment in the company after Tam feuded with President Trump over the CEO’s business ties to China — even though the money was supposed to be money Intel was supposed to receive from the Biden-era CHIP Act.
Domestic semiconductor manufacturing has been a focus of the U.S. government since the epidemic highlighted the risks of technology supply chains relying on Taiwan. Escalating tensions with China, including threats to invade Taiwan, have further heightened the sense of urgency.
“Semiconductors are not only important economically, they are actually important from a national security perspective,” Technaanalysis analyst Bob O’Donnell told Yahoo Finance. “As a truly American company, Intel has by far the largest infrastructure.”
Many critics argue that the broader shift toward state capitalism in the United States under Trump, exemplified by Intel Capital, raises questions about national security and conflicts of government interest. But analysts say the U.S. government’s 10% stake in Intel could lead to various positive outcomes for the company, such as giving Intel a say in trade policy affecting semiconductors. What’s more, the United States could step in and incentivize or force large companies like Apple to use the chipmaker’s foundries.
Investments of US$2 billion from SoftBank and US$5 billion from Nvidia further boosted investor confidence in Intel stock. The cash infusion helped the company curb huge losses and find a path forward. But it’s worth noting that the Nvidia deal does not include an agreement for Intel’s foundry business to make chips for the artificial intelligence giant.
Intel’s biggest potential customers for its foundry business — Nvidia, Apple (AAPL) and Qualcomm (QCOM) — are also somewhat of a competitor in its product unit and have a long-standing relationship with TSMC. Not to mention, TSMC is building $165 billion worth of manufacturing capacity in the United States, which weakens the geopolitical arguments for these companies to use Intel to produce chips.
To win these customers, Intel needs to prove that its latest generation manufacturing processes meet standards. The chipmaker’s 18A process is a massive technological feat that was originally marketed to external customers and is now used primarily to make Intel’s own products. The success of those products – Intel’s upcoming Panther Lake chips for PCs and Clearwater Forest chips for data centers – could help convince the company to use its next-generation processes called 18AP and 14A, analysts said.
There are already rumors that Apple may use Intel’s manufacturing processes, specifically its 18AP process, to produce its lowest-end computer chips.
BNP Paribas analyst David O’Connor estimates that Intel has 12 to 18 months to secure a large outside customer for 14A so that the process can continue as planned.
He called this process “the key to Intel’s success in the foundry business and perhaps even its long-term exit from manufacturing.”
“Everything depends on 14A and its success,” O’Connor said.
Other analysts gave a longer timeline for Intel’s return to profitability.
Bernstein analyst Stacy Rasgon said, “It took 10 years to break it. Why fix it in less than 10 years?”
Laura Bratton is a reporter for Yahoo Finance. Follow her at Bluesky @laurabratton.bsky.social. Email her at laura.bratton@technology shoutinc.com.
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