Commentary
A few days ago, it did not seem that Intel’s future could possibly be any less certain, and that there was one person seemingly keeping the company from falling further into the abyss. That person was Intel CEO Pat Gelsinger.
RELATED: Intel CEO Gelsinger is out, focus put on new Products group
Now, Gelsinger is gone, Intel’s future somehow seems infinitely less certain than it did just a few days ago, and now there is one person who could keep the company from falling further into ignominy. That person is not Intel’s next CEO, or one of its current co-CEOs. That person is President-elect Donald J. Trump.
Intel’s problem are numerous and widely documented: its lack of readiness for recent smartphone and AI developments, its profuse bleeding of cash to support its Intel Foundry plans, its lack of ability to fight off motivated CPU challengers like AMD, and now we can include the recent disappointment of receiving less in initial CHIPS Act funding than had been expected (which is even more disappointing if you were expecting the Biden Administration to hand over even more funding in a bold move to ensure some stability for Intel before it hands over power to the Trump Administration next month).
What Intel did have was a man in charge with an intimate bond to Intel’s history and rock-solid sense of commitment to see through his vision for the company’s future success.
Now, Intel lacks even that, and it is easy to believe that as the company moves its focus into generating new product revenue (What a concept!), Intel as we know it is ceasing to exist. The company could exit a number of legacy businesses, it could abandon its subsidiary commitments and sell Altera and Mobileye, and it could turn itself into a lean, mean fighting machine motivated entirely by the future of AI. Amid all of this, what will happen to its foundry strategy, which it has committed billions of dollars to and convinced the federal government it should commit billions of dollars to if it cares about reinvigorating America as a leader in the semiconductor industry.
RELATED: What’s the path for Intel now? Push AI.
Can Intel sell the foundry business? While it is legally restricted from doing so as long as it is receiving CHIPS Act funding, it could sell up to 49.9% of Intel Foundry to investors who can help stomach the continued spending and continued losses required to make it a success.
Could it shut down its foundry business and wave bye-bye to government funding?
Could the federal government step in with some other form of funding or a new plan for Intel Foundry? Even before Gelsinger’s departure, it seemed like U.S. government interests were at least informally discussing how to go about this if Intel was unable to save itself.
Could Intel Foundry be saved by a consortium of large customers and partners who commit to bringing their business to it for years to come?
These questions have been asked by observers over the last few days, and seem likely to linger as the second Trump Administration begins next month. Before the election, the possibility of a Trump win was another big factor in the uncertainty surrounding Intel. Trump was on record as being no fan of the CHIPS Act (maybe because it was someone else’s idea), and it was thought he might urge a Congressional repeal or indefinitely delay following through on funding.
Yet, immediately after the election, Intel’s stock value was buoyed like many others by the victory of Trump’s America-first ideology. After this victory, could Trump really allow such an icon of American industry to fall under his watch?
RELATED: Trump wants to repeal the CHIPS Act. Is that a good idea?
While a CHIPS Act repeal or delay could remain on the table, look for President Trump during 2025 to do something to help prop up Intel, whether some other form of reimagined (or maybe just renamed for himself) funding, big government contracts, reassurance that Intel is too important to fail, or promises of a fast path to regulatory approval for whoever wants to buy the entirety of Intel.
The little bug in his ear as this happens (or maybe as we speak): Elon Musk. As Trump becomes distracted by a variety of things in the early days of his return to power, Musk could keep the Intel drama front and center for him, advising what a bad idea it could be to let Intel wither. What does Musk have to gain? Perhaps Trump could use government means to rescue Intel, and assign it to Musk as busy-work, something that could appease other members of the President-Elect’s inner circle who are jealous of Musk’s intimacy with Trump. Musk’s Tesla has used Intel chips in the past, and though it has been moving away from them, Musk could see Intel Foundry under his own direction as a U.S. base for fabrication of Tesla’s Dojo supercomputing chips, not to mention other chips for Tesla and its partners.
Does this all sound too outrageous and unrealistic? I would have said so at any time before the recent election, but how can anything under Trump be ruled out? Trump could ignore Intel and let it die, but he won’t when saving it is something for which he can take all the credit.