Intel said on Thursday that Google will continue using its Xeon processors across a wide range of workloads.

This includes inference and general computing, as companies move from training AI models to running them in real-world applications.

That transition is changing demand. More firms now need chips that can handle steady, heavy workloads rather than short bursts of training. CPUs are becoming more important again, especially for inference tasks and memory-heavy operations.

Google will also adopt Intel’s latest Xeon 6 processors. These chips are designed to improve efficiency and handle larger volumes of data.

According to the companies, they are already being used in Google Cloud’s C4 virtual machines, where they deliver significant cost improvements when running open-source AI models.

At the same time, both firms are working more closely on infrastructure processing units, known as IPUs.

These chips take over tasks such as networking, storage and security, which are usually handled by CPUs. In moving those jobs away, the CPUs can focus on core computing work.

Intel’s chief executive Lip-Bu Tan said: “Scaling AI requires more than accelerators – it requires balanced systems. CPUs and IPUs are central to delivering the performance, efficiency and flexibility modern AI workloads demand.”

The growing use of agent-based AI systems is also pushing demand higher. These systems carry out multi-step tasks and need more background processing power, which usually falls on CPUs rather than specialised accelerators.

For Intel, this is important as the company lost ground earlier in the AI boom to competitors that focused on graphics processing units. Now, it is trying to recover by strengthening its position in general-purpose and infrastructure computing.

The partnership with Google gives it a strong foothold in cloud computing, where demand for AI services is continually increasing.

Intel is also expanding its efforts elsewhere. It recently said it will join a new AI chip project linked to Elon Musk, working alongside SpaceX and Tesla to support robotics and data centre development.

In manufacturing, the company plans to take full control of its Ireland facility by buying back a stake from Apollo Global Management. The site produces Xeon server processors and is paramount to Intel’s supply chain.

Both Google and Intel are expected to highlight their joint work later this month at Google Cloud Next 2026 in Las Vegas, where they will present updates on AI infrastructure, security and edge computing.

The Japanese group, SoftBank will purchase Intel common stock at $23 per share, giving it close to a 2% stake and making it one of Intel’s top shareholders. 

The announcement, made after U.S. markets closed on Monday, sent Intel shares up more than 5% in after-hours trading, while SoftBank’s stock slipped over 5% in Tokyo.

Masayoshi Son, chairman and CEO of SoftBank, said, “Semiconductors are the foundation of every industry. For more than 50 years, Intel has been a trusted leader in innovation. This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.”

The investment lands at a challenging moment for Intel. Under new CEO Lip-Bu Tan, the company has been cutting costs and narrowing focus. It shut down its automotive chip division earlier this year, slashed between 15% and 20% of its foundry workforce, and doubled down on its client and data centre chip portfolio, where it still lags behind rivals Nvidia and AMD.

Tan, who has been navigating both corporate restructuring and political issues, welcomed SoftBank’s support. “We are very pleased to deepen our relationship with SoftBank, a company that’s at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing U.S. technology and manufacturing leadership. Masa and I have worked closely together for decades, and I appreciate the confidence he has placed in Intel with this investment.”

Beyond chips, SoftBank’s CEO Son has been positioning the group as a key player in the next wave of artificial intelligence infrastructure. Earlier this year, SoftBank acquired Foxconn’s Lordstown, Ohio factory, which will be repurposed to manufacture AI data centre equipment. 

The site forms part of the $500 billion Stargate project, a venture involving SoftBank, Oracle and OpenAI, aimed at building large-scale AI server capacity in the United States.

Meanwhile, U.S. politics are heavy over the semiconductor sector. The Trump administration has floated the idea of converting CHIPS Act funds into equity, potentially giving Washington as much as a 10% stake in Intel.

The White House has also threatened new tariffs on imported chips in a bid to strengthen domestic production and cut reliance on Asian giants like TSMC and Samsung.

U.S. shares rose 7% on Thursday, with a further 2.6% gain after hours, while Frankfurt-listed shares climbed 3.6% on Friday. Investors are betting that government backing could provide much-needed stability for the struggling chipmaker.

The potential investment was first reported by Bloomberg, noting discussions that followed an 11 August meeting between President Donald Trump and Intel’s Chief Executive Officer, Lip-Bu Tan. 

The talks reportedly focused on how Washington could accelerate domestic semiconductor manufacturing, with the delayed Ohio mega-fab project expected to be a central part of the plan.

The development comes amid one of Intel’s most challenging periods in decades. The company posted a $2.9 billion net loss in the second quarter of 2025, driven by $1.9 billion in severance costs and $800 million in asset impairments. 

A restructuring plan has seen 25,000 jobs cut and major chip fabrication projects in Germany, Poland, and Ohio scrapped or delayed.

Trump’s involvement with Intel has been far from smooth. Days before the reported stake talks, he called for Tan to resign over what he described as “highly conflicted” ties to Chinese firms. 

His comments followed a letter from Senator Tom Cotton, alleging Tan’s investments in over 100 Chinese technology companies, including at least eight linked to the People’s Liberation Army.

Tan’s past leadership of Cadence Design Systems has also resurfaced in political debate. In July 2025, the company admitted to illegally exporting chip design software to a Chinese military university, paying $140 million in fines.

Despite political issues, Intel aims to continue cooperating with the White House. “Intel is deeply committed to supporting President Trump’s efforts to strengthen U.S. technology and manufacturing leadership,” a company spokesperson said. 

“We look forward to continuing our work with the Trump Administration to advance these shared priorities, but we are not going to comment on rumours or speculation.”

Tan has also made it apparent that there will be no return to unchecked spending. “There are no more blank cheques. Every investment must make economic sense,” he said.

Intel has already secured nearly $8 billion in federal subsidies through the CHIPS and Science Act, placing it among the largest beneficiaries of U.S. semiconductor funding.

Analysts suggest a direct government stake could help stabilise Intel’s finances and restore competitiveness against rivals Nvidia, AMD, and TSMC.

The accusation, which was posted Thursday on Trump’s social media platform, has left the tech and political sectors in shock, increasing evaluation on one of America’s most strategically important chipmakers.

“The CEO of INTEL is highly CONFLICTED and must resign, immediately. There is no other solution to this problem. Thank you for your attention to this problem!” Trump posted on Truth Social.

Trump offered no specific evidence to back his claim, but his statements come in the wake of some Republican issues on the company. 

On Wednesday, Senator Tom Cotton had written to Intel’s board demanding clarity on Tan’s personal and professional ties to Chinese entities. 

Cotton’s letter raised red flags about Tan’s leadership at Cadence Design Systems—where tools were reportedly sold to a Chinese military-linked university—and his subsequent investments in Chinese tech firms through his venture capital arm, Walden International.

A Reuters report detailed that Tan had channeled over $200 million into various Chinese companies, with several reportedly linked to the country’s military or national security infrastructure. Cotton has questioned whether such entanglements are compatible with Intel’s receipt of federal funds under the CHIPS and Science Act.

“The new CEO of @intel reportedly has deep ties to the Chinese Communists. U.S. companies who receive government grants should be responsible stewards of taxpayer dollars and adhere to strict security regulations. The board of @Intel owes Congress an explanation,” Cotton posted on X, attaching his formal letter.

Tan, who assumed the role of CEO in March 2025, has been steering Intel through a major overhaul in the face of stiff competition from Nvidia, AMD, and TSMC. 

His tenure has so far involved aggressive cost-cutting: thousands of job losses, cancelled factory expansions, and efforts to offload non-core business units. His stated aim is to restore Intel’s reputation as a leader in chip engineering, a position it has steadily lost over the last decade.

But these leadership decisions now risk being overshadowed by the political fallout. Intel’s strategic importance to U.S. national security is significant. It is the single largest beneficiary under the CHIPS Act, with $8.5 billion earmarked for new manufacturing facilities across Arizona, New Mexico, Ohio, and Oregon. 

The controversy around Tan’s alleged links to China could compromise the company’s ability to maintain bipartisan confidence and secure future federal support.

Intel has not yet responded to multiple requests for comment on the matter. Tan himself has remained silent as calls for transparency mount.

Meanwhile, investors are reacting. Intel’s stock fell nearly 5% in premarket trading following Trump’s post, reflecting growing anxiety over potential leadership instability and the political issues surrounding the company. 

With Washington increasingly wary of Beijing’s influence in the tech supply chain, the timing of these revelations, whether substantiated or not, puts Intel in an uncomfortable spotlight.

The company confirmed plans to reduce headcount to 75,000, down from over 96,000, via attrition and targeted layoffs, many of which have already been executed.

This downsizing is just one piece of an overhaul led by newly appointed CEO Lip-Bu Tan, who stepped in earlier this year to confront years of strategic missteps and financial underperformance. 

Despite a short-term bump in revenue, Intel expects to post a larger-than-anticipated third-quarter loss of 24 cents per share, well above the 18-cent loss forecast by Wall Street analysts. Shares tumbled nearly 6% in Frankfurt following the announcement.

Tan, who is pressing for a more cost-conscious and focused Intel, made his intentions clear in a memo to employees: “There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.”

That message is a big difference from the company’s previous approach under former CEO Pat Gelsinger, who championed aggressive expansion plans and heavy investment in next-generation manufacturing processes like 18A and the upcoming 14A node.

Tan, however, appears sceptical of that strategy’s commercial viability, particularly when it comes to selling these technologies to external customers. Reuters recently reported that Intel may abandon plans to offer 18A tech to outside firms altogether.

In what he describes as a “disciplined approach,” Tan is halting construction of new chip plants in Poland and Germany, slowing down development in Ohio, and consolidating packaging operations from Costa Rica to more established hubs in Vietnam and Malaysia.

“I do not subscribe to the belief that if you build it, they will come,” he said in a call with analysts, adding that he will personally approve all major chip designs going forward.

Chief Financial Officer David Zinsner told Reuters the company has taken a “surgical” approach to job cuts, removing about half of Intel’s management layers in the process. The aggressive cost-cutting contributed to restructuring expenses of $1.9 billion in the second quarter alone.

Despite the grim forward-looking forecast, there were signs of short-term improvement. Intel’s second-quarter revenue held flat at $12.9 billion, breaking a year-long streak of declining sales and surpassing analysts’ expectations of $11.92 billion. 

Still, adjusted earnings showed a loss of 10 cents per share, in stark contrast to estimates of a 1 cent gain. The unadjusted figure was worse: a 67-cent-per-share loss.

Intel’s competitiveness has eroded significantly over the past decade. While Nvidia has surged to the top in the high-growth AI chip segment, and AMD continues to nibble away at its market share in both consumer and server chips, Intel has struggled to deliver products on time and budget. 

Its push into the chip foundry business—intended to rival industry leader TSMC—has largely faltered.

“They may have overspent on 18A … but I think this is the painted picture of a new fiscally disciplined base that they’re going to go from here. I think that’s the right approach,” said Ben Bajarin, CEO of Creative Strategies.

The global economic backdrop hasn’t helped. Although semiconductors have been spared from sweeping tariffs, customers remain cautious due to macroeconomic challenges, usually pulling forward orders or delaying long-term commitments.

This restructuring, the first major act by Intel’s newly appointed CEO, Lip-Bu Tan, aims to dismantle bloated bureaucracy, cut operating costs, and pivot sharply toward engineering efficiency. 

The company’s problems didn’t start yesterday. Intel has been losing ground, value, and relevance for years. In five years, its stock has plunged by 67%. 

Competitors like Nvidia have surged ahead. Intel, once a leader, is now trying to catch up in key sectors like artificial intelligence chips and high-performance computing. 

The decline hasn’t just been in market numbers, but internal too. Management became top-heavy, decision-making slow, and innovation sluggish.

Tan took over in late 2024 after Intel axed around 15,000 roles as part of a $10 billion cost-cutting plan. That wasn’t enough. Now, he’s going further. Just weeks into his tenure, he’s reportedly flattening the corporate hierarchy. Key chip divisions now report directly to him. At a recent staff town hall, he said: “We will have to make tough decisions.”

And this is one of them.

Intel had around 108,900 employees at the end of 2024. This new wave of cuts will remove about 21,000 of them. 

Across the tech sector, layoffs are increasing. Over 23,500 workers have already been dismissed across 93 companies this year alone.

We’re also seeing Intel retreat from parts of its business. Earlier this month, it sold 51% of its Altera semiconductor arm to private equity firm Silver Lake. Altera was once key to Intel’s broader chip ambitions. 

That sale goes beyond a shift in assets—it shows a recalibration of priorities. Non-core units are being spun off or shut down, and every dollar is being redirected toward tech areas where Intel can still compete.

For now, the company hasn’t commented. No official statements have been released.

But the timing of the news is no coincidence. Intel is due to release its Q1 earnings this week. The layoffs are likely to top the conversation during Tan’s first earnings call as CEO. 

Karthik Narain, group CEO and CTO, Accenture called Microsoft a ‘trusted partner.

Karthik’s words:

“Congratulations to Microsoft on this incredible milestone. Accenture is proud to have been a trusted partner on this journey—with more than three decades of joint investment and co-development focused on bringing Microsoft’s transformative technology to organizations across the world. Alongside our joint venture Avanade, we help our clients innovate and reinvent their businesses with Microsoft technology. As the world enters the intelligence era, we believe that deep strategic partnerships like ours are a competitive differentiator and together, we can help accelerate value for every enterprise, government and citizen for the next 50 years and beyond.”

Jerry Kao, COO of Acer Inc. said: “Acer has partnered with Microsoft for four decades, witnessing how their constant innovation has been instrumental to the development of computing technology. From PCs leading to the digital era, and now cloud and artificial intelligence driving transformation all around us, we’re excited to continue working together to create impactful solutions that drive change.”

Shantanu Narayen, the chair and CEO of Adobe wrote:

“Congratulations to Microsoft on your 50th anniversary! This milestone is a testament to your tremendous innovation and impact. Adobe is proud to partner with Microsoft to deliver transformative digital experiences and we’re excited to keep pushing the boundaries of what technology and AI can help deliver for billions of people around the world.”

Also, Dr. Lisa Su, chair and CEO AMD sent congratulatory message to Microsoft: “Congratulations to Satya Nadella and the entire Microsoft team for an amazing 50 years of innovation! Microsoft is truly a pioneer in the industry and AMD is honored to be your partner. I’m incredibly proud of our collaboration and joint work together over the years—from driving the industry standard for personal computing with Windows, to powering the most important Azure cloud services used by so many every day with AMD EPYC and Instinct, to reaching billions of gamers with Xbox. I look forward to all we will do together over the coming years! Together, we’re shaping the future of AI and the next generation of computing.”

S.Y. Hsu and Samson Hu, Co-CEO of ASUS:

“We are honored and proud to have built a solid, long-term partnership with Microsoft for over 30 years, a company that remains at the forefront of cutting-edge technology, and that has helped ASUS achieve its AI integration goals. We look forward to many more successful years of future collaboration.”

Jeff Clarke, vice chairman and chief operating officer, Dell Technologies also felicitates with the partner: “For more than four decades, Dell’s partnership with Microsoft has driven breakthrough innovations that transform industries, empower customers and improve lives around the world. Together, we’ve redefined possibilities, from personal computing to the AI-driven technologies shaping our future, and we look forward to what lies ahead.”

Jim Johnson, senior vice president, Client Computing Group, Intel:

“For decades, Intel’s partnership with Microsoft has sparked innovation and delivered value to our customers. Together, we’ve revolutionized industries and established new benchmarks for excellence. We look forward to collaborating for the next 50 years—and beyond.”

Carl Carande, global head of Advisory at KPMG International and Vice Chair of Advisory at KPMG in the US: “Our long-standing strategic alliance with Microsoft continues to drive transformative digital innovation, enabling us to deliver greater value to clients and accelerate business outcomes. We are committed to working together with Microsoft to help organizations harness AI and emerging technologies to navigate complexity, unlock new opportunities, and lead with confidence in the intelligent age. We continue to advance our 360-degree relationship, working with Microsoft to lead the future of innovation for our own operations, for Microsoft and for clients.”

Yuanqing Yang, CEO and chairman, Lenovo:

“Having worked alongside every CEO of Microsoft in my career, I would like to personally congratulate Microsoft for its 50 extraordinary years of driving relentless innovation. From PC to mobile, and now onto the AI era, Lenovo and Microsoft have partnered in bringing personal computing to every household, enhancing enterprise productivity with Microsoft Office, and most recently in powering more personalized, productive, and protected Lenovo AI PCs with Copilot+ experiences, delivering cloud- based services and AI-driven IT solutions, enabling scalable infrastructure for the new AI era, and working towards a vision of personal AI twins and enterprise AI twins. Lenovo is proud to be a major part of this amazing journey with Microsoft and we are committed to this partnership for many more decades to come.”

Jeff Fisher, senior vice president for GeForce at NVIDIA: “Microsoft’s contribution to advancing computing over the past 50 years is worth celebrating. The NVIDIA and Microsoft partnership will continue to deliver the next era of accelerated computing and AI, from GeForce gaming to RTX AI PCs.”

Stephanie Mosticchio, principal, US and Global Microsoft Alliance Leader, PwC:

“As a proud Microsoft alum, I’ve seen firsthand how our collaboration has evolved to drive meaningful change for businesses across industries. From strategy through engineering and implementation, PwC and Microsoft drive innovation and deliver real business outcomes for clients worldwide.”

Matt Hicks, president and CEO Red Hat: “Red Hat and Microsoft have a long history of driving customer success together, from the datacenter to the cloud, out to the edge, and now, into the AI era. We continue to bring together Red Hat’s open-source expertise with Microsoft’s leading cloud capabilities to meet our customers wherever they are in their IT roadmap.”

Jay Kim, executive vice president and head of Customer Experience Office, Samsung:

“Partnering with Microsoft has allowed us to leverage cutting-edge technology, set new standards for excellence, and deliver value to our customers. Our collaboration has driven innovation, delivering the most premium PC experience in the industry with the Galaxy Book series, and seamlessly integrating Galaxy smartphone and PC capabilities to create an experience that truly resonates with our customers.”

Christian Klein, CEO, SAP: “Many congratulations to the entire Microsoft team on this milestone anniversary! For 50 years, you have been at the forefront of technology and our longstanding partnership is a testament to our two companies’ shared commitment to innovation and transformation. Together, we have driven significant advancements in key areas from cloud computing to AI, always enabling our customers to stay ahead in an ever-evolving digital landscape. We’re excited about the many ways Microsoft and SAP will continue to push the boundaries and look forward to the next chapter in your incredible success story.”

Frederic Godemel, executive vice president, Energy Management, Schneider Electric:

“Schneider Electric and Microsoft have been driven by a shared vision of world that is more electric and digital. We’re thrilled to celebrate Microsoft’s 50th anniversary and excited to continue pioneering innovative solutions together, harnessing the transformative power of AI, pushing the boundaries of what’s possible for our customers and shaping a sustainable future for generations to come.”

Erica Volini, executive vice president of Worldwide Industries, Partners, and Go-to-market at ServiceNow: “50 years is an enormous milestone, and it’s our honor to celebrate Microsoft as both a customer and partner on their journey. Their history of innovation has been instrumental in shaping the future of technology and is why ServiceNow values our partnership so deeply. Together we will keep pushing the boundaries of what’s possible and transforming how business gets done. Here’s to another 50 years!”

Tyler Prince, senior vice president, Worldwide Alliances and Channels, Snowflake:

“As someone who has led global partnerships at several of the world’s leading technology companies, I am impressed by how Microsoft has leaned in with their partner ecosystem and taken a leadership position in cloud computing and AI. We, at Snowflake, are excited to continue to strengthen our partnership in the years to come, and we look forward to jointly driving customer success in the age of enterprise AI. Congratulations Microsoft and thank you for your leadership and innovation.”

Krishna Mohan, head of Cloud Business Group, TCS: “In the past five decades, Microsoft has consistently pushed the boundaries of technology, transforming the way we live, work, and connect. Microsoft’s role in democratizing technology innovation at scale has empowered organizations worldwide to streamline operations and enhance productivity.

This relentless pursuit of excellence and commitment to groundbreaking solutions is common to both our organizations, especially as we deliver sustainable innovations that underscore our shared dedication to creating a better future for generations to come. Congratulations to Microsoft on reaching 50 years of innovation.”

Kedar Kondap, senior vice president and general manager, Product Management, Qualcomm Technologies, Inc.:

“Qualcomm is proud of our collaboration with Microsoft, from which we have delivered world-changing technology to market over the years. We share a commitment to delivering innovative solutions, and could not be more excited for what’s to come.”

50 hearty cheers to Microsoft!

Recently, Intel has been losing investors’ trust and having internal issues in its manufacturing and design operations. The company has brought in Lip-Bu Tan to help resolve this.

Tan, a veteran of the semiconductor industry, previously served as CEO of Cadence Design Systems and was a member of Intel’s board until August 2024. His experience in both chip design and venture capital places him as a strategic choice to scale up Intel’s ongoing transformation. 

Following the announcement, Intel’s shares surged by 12% in extended trading, showing that investors are confident about his leadership.

In a letter to employees, Tan acknowledged the challenges ahead while stating that Inte has the ability to regain its competitive edge. “Together, we will work hard to restore Intel’s position as a world-class products company, establish ourselves as a world-class foundry and delight our customers like never before,” he stated.

Intel has been under pressure to adapt to the fast-changing semiconductor market, particularly as competitors such as Nvidia and TSMC continue to dominate the sector. 

The company’s efforts to expand its contract manufacturing business have brought issues about cash flow, with reports indicating that players in the space, including Broadcom and TSMC, have explored potential partnerships or acquisitions of Intel’s assets.

Analysts have welcomed Tan’s appointment, stressing his technical expertise and deep industry connections as key assets.

Jack E. Gold, an analyst at J. Gold Assocommented, “Tan has an intrinsic understanding of the semiconductor industry, both from a product design aspect as well as the needs of enabling chip manufacturing—an area that Intel Foundry needs help in making their tools more user-friendly and accessible for potential customers.”

Tan’s leadership arrives at a time of geopolitical tensions affecting the semiconductor industry. The United States government has pushed for increased domestic chip production, with former President Donald Trump advocating for policies that could reshape global supply chains. 

While Intel stands to benefit from government incentives, the company must also contend with growing competition from Asian manufacturers.

Nonetheless, analysts believe the appointment of Lip-Bu Tan shows that Intel is ready to maintain its current structure rather than split its design and manufacturing operations. 

Gelsinger, who also stepped down from the company’s board of directors, helped build Intel’s technology over the years. 

In his absence, Intel has appointed David Zinsner, the company’s chief financial officer, and Michelle Johnston Holthaus, formerly the executive vice president and general manager of Intel’s Client Computing Group, as interim co-CEOs.

Intel appointed Zinsner and Holthaus to maintain stability and drive the company’s product and manufacturing goals even as the transition takes place. 

Zinsner, with over 25 years of experience in finance and operations in the technology sector, has broad knowledge of semiconductor manufacturing, having previously held leadership positions at Micron Technology. 

Holthaus, who has been with Intel for nearly three decades, now holds the newly created position of CEO of Intel Products, overseeing the company’s various key divisions, including the Client Computing Group and Data Centre and AI Group.

Frank Yeary, Intel’s independent board chair, will take on the role of interim executive chair as the board searches for a permanent CEO. The company has formed a search committee, and Yeary has stated that the priority is to find a successor who can continue Intel’s journey of innovation while restoring investor confidence and improving profitability.

Gelsinger’s tenure at Intel, particularly after his return in 2021, included the revitalisation of the company’s manufacturing processes and helped Intel to compete more effectively with rivals like TSMC and Samsung. 

However, there were delays in major projects and struggles to meet expectations surrounding AI and chip manufacturing. 

Nonetheless, Gelsinger’s contributions to Intel’s growth, including his early work on processors like the 80486 and his leadership in the development of technologies such as Wi-Fi and USB, are widely recognised.

Speaking of his time at Intel, Pat Gelsinger said he was happy with the company’s accomplishments and grateful for the opportunity to lead a team of talented individuals. 

Even as he leaves the company, Zinsner and Holthaus will continue to focus on simplifying Intel’s product portfolio and advancing its manufacturing processes, ensuring that the company remains competitive in the global semiconductor industry.

This funding, announced by the Department of Commerce, will support Intel’s manufacturing projects in Arizona, New Mexico, Ohio, and Oregon, to revitalise the American semiconductor industry under the CHIPS and Science Act of 2022.

The CHIPS Act, a signature initiative of President Joe Biden’s administration, allocates $52.7 billion to strengthen the domestic chipmaking sector. Of this, $39 billion is earmarked for semiconductor production and $11 billion for research and development. 

Intel’s subsidy is the largest awarded to date under the programme, as the government seeks to reduce reliance on foreign supply chains and address vulnerabilities exposed during the pandemic.

Intel, which has already achieved several project milestones, is expected to receive at least $1 billion of the subsidy by the end of 2024. 

Commerce Secretary Gina Raimondo spoke on the impact of this investment, stating that it ensures “American-designed chips are manufactured and packaged by American workers for the first time in years.”

Scaling Domestic Capacity Amid Challenges

Intel’s funding will help in boosting the U.S. semiconductor space. The company has committed to an expansive $100 billion domestic manufacturing initiative across four states, which includes constructing new facilities and upgrading existing ones. 

However, the grant amount was revised from an earlier projection of $8.5 billion, following Intel’s separate $3 billion contract with the Department of Defense for producing advanced semiconductors under a national security programme. 

This adjustment was made without compromising the company’s vision or its projects’ timelines.

Nevertheless, the chipmaker had declining profit margins and workforce reductions have followed years of aggressive investments led by CEO Pat Gelsinger. 

But Gelsinger noted the importance of bipartisan support for restoring U.S. technology leadership, calling it “critical to the nation’s economic growth and security.”

Intel’s evolving business strategy includes transitioning to a “foundry” model, where it produces chips designed by external firms. This change has necessitated significant capacity-building, with major investments in new fabrication plants, particularly in Ohio and Arizona. 

Yet, global market challenges have delayed some projects, including those in Germany and Poland, reflecting the complex dynamics of the semiconductor industry.

Safeguards and Incentives

The Commerce Department has introduced measures to ensure accountability and protect taxpayer funds. Intel’s award includes restrictions on stock buybacks for five years and provisions for sharing excess profits. 

Again, the company opted against an $11 billion government loan initially offered, pointing to unfavourable terms for its shareholders.

Beyond direct subsidies, Intel stands to benefit from a 25% investment tax credit on qualified expenditures exceeding $100 billion. These incentives, coupled with strategic partnerships, such as its agreement with Tower Semiconductor, allow the company to strengthen its domestic and global footprint.

The U.S. government has prioritised semiconductor production as a cornerstone of its industrial and economic strategy. The CHIPS Act is part of a goal to reshore manufacturing, create high-paying jobs, and enhance national security. 

White House Deputy Chief of Staff Natalie Quillian described the Intel subsidy as an essential step in implementing this vision, reiterating its role in delivering tangible benefits to the American people.