Intel $Intel(INTC)$ is facing increasing financial pressure—now compounded by political heat. Just yesterday, U.S. President Donald Trump publicly demanded on Truth Social that Intel CEO Lip-Bu Tan resign immediately, citing “serious conflicts of interest.” Trump pointed to Tan’s prior investment ties to China, declaring that “resignation is the only option.” The political attack led to Intel’s stock falling over 3% on the day.
Source: Truth Social
Why is Trump pushing for Tan’s resignation?
The main reason behind Trump’s demand centers on Tan’s deep investment history in China. Before joining Intel, Lip-Bu Tan was the founder and CEO of venture capital firm Walden International, which has invested heavily in China’s tech sector. Public records show Tan has had investment links to over 600 Chinese tech companies, and eight of them are reportedly tied to the Chinese military.
Intel $Intel(INTC)$ quickly issued a public statement in response, stressing that the company, its board, and CEO Tan are fully committed to supporting U.S. national and economic security. The statement highlighted Intel’s 56-year U.S. manufacturing presence and its massive ongoing investment in a new fab in Arizona—clearly aiming to align with the “America First” agenda and appease political pressure from Trump.
Analysts suggest Trump’s message is clear: Intel and Tan must pick a side. And Intel’s statement, emphasizing American values and cooperation with the government, clearly shows an effort to play along.
Massive Losses and Strategic Retrenchment
Just over a week ago, Intel reported its Q2 2025 earnings: revenue came in at $12.9 billion—flat year-over-year—but net losses widened to a staggering $2.9 billion, up from a $1.6 billion loss in Q2 2024. The losses were driven by $1.9 billion in restructuring costs and $800 million in asset impairments. Gross margin fell to 27.5%, down 7.9 percentage points YoY, and operating loss margin rose to 24.7%.
Source: Intel Q2 Result
Business unit performance showed clear divergence:
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Client Computing revenue: $7.9 billion (down 3%)
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Data Center & AI revenue: $3.9 billion (up 4%) — but far below NVIDIA’s 154% growth
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Foundry Services revenue: $4.4 billion (up 3%), but with limited traction from external customers
Under financial strain, Intel announced a series of major cost-cutting actions:
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A 15% global workforce reduction in 2025
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Capital expenditures slashed from $25–27B to $18B
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Cancellation of the planned Germany fab
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Slowed progress on its Ohio fab
These announcements triggered another sharp drop in Intel’s share price, down nearly 10% post-earnings.
Foundry Pivot Facing Setbacks
Under Tan’s leadership, Intel has made a clear strategic shift toward becoming a foundry service provider, aiming to compete more directly in the booming AI market. But the pivot has run into serious roadblocks.
Intel’s Panther Lake, its first processor using the 18A process node, was scheduled for mass production by the end of 2025. However, by mid-2025, yields were reportedly just around 10%, far below the 50% needed for high-volume production. Rumors even surfaced that Intel might scrap its 18A node plans altogether.
As for the more advanced 14A process, Tan admitted that its future “depends on customer commitments.” This statement is being interpreted as a warning: without sufficient orders, Intel may abandon R&D efforts on 14A, and outsource production—effectively giving up its traditional IDM (Integrated Device Manufacturer) advantage.
Meanwhile, Intel’s narrative around “Made in America” has also been challenged. TSMC’s $Taiwan Semiconductor Manufacturing(TSM)$ expansion in Arizona is gaining traction, and Intel’s hoped-for partnership using TSMC tech in Intel U.S. fabs remains stalled. Ongoing financial constraints may further limit Intel’s expansion capacity.
Strategic Positioning Amid Political Pressure
In the face of both financial losses and technical hurdles, Intel is being forced into a deep strategic reconfiguration. The company is now prioritizing financial discipline over technology leadership, a major shift from its previous identity. Ironically, this runs counter to the current industry trend of aggressive expansion and innovation—casting doubt on Intel’s longer-term growth story.
The financial stress has also hurt Intel’s credit profile: Fitch downgraded its long-term issuer rating from BBB+ to BBB, only two notches above junk status.
Source: Fitch Ratings
This makes Intel heavily reliant on subsidies from the U.S. CHIPS and Science Act. The company is eligible to receive up to $8.5 billion in direct subsidies and $11 billion in loans, in addition to a 25% investment tax credit for qualifying U.S.-based chip production. In this context, Intel’s public commitment to U.S. economic and national security becomes easier to understand.
Still, it’s unclear whether such statements will satisfy Trump. If concerns over Tan’s background result in Intel losing access to these subsidies, it could trigger major boardroom instability. On the flip side, leaning too heavily into a U.S.-centric stance might alienate China—a market that remains crucial to Intel’s global operations.
Invesight Viewpoint
Intel now finds itself in a tough spot—financially, technologically, and politically. It must simultaneously:
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Stabilize operations
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Fix its manufacturing roadmap
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Rebuild trust with investors
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Navigate geopolitical tensions between the U.S. and China
Tan’s personal history has now become politicized, adding a whole new layer of uncertainty. Whether Intel can successfully redefine its identity and find the right balance between financial survival, tech leadership, and global diplomacy will determine the future of this once-dominant chipmaker.
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