The Trump administration became unprecedented and confusing last week when it announced plans to divert the money it was supposed to receive through the Joe Biden-era government grant program.
It remains unclear whether it is possible to convert these government grants into a fair way, but that is controversial – it is not so clear how this move will solve Intel’s biggest problem, or how it will solve its waffle casting business. Even Intel can’t believe it.
Intel Foundry, which manufactures custom semiconductors for external customers, is not fruitful for the company. According to Reuters, the business division lost a potentially big deal like Sony, costing it considerably more than it brought to the company.
Intel Foundry reported an operating profit loss of $3.1 billion in the second quarter. The company has also fired thousands of people since the start of the year, and the foundry business unit has been hit particularly hard.
The difference in how Intel will turn the struggles of Foundry Business was partly responsible for Lip-Bu Tan’s resignation from the company committee in August 2024. Tan was appointed CEO in the spring of 2025.
Kevin Cassidy, managing director of Rosenblatt Securities, told TechCrunch he doesn’t know how the deal will solve the Intel issue. Intel Foundry doesn’t need money to solve the problem, he said, but instead they need to change their approach to customers.
“They didn’t understand customer service,” Cassidy said of Intel Foundry’s struggles to sign customers. “They were always manufactured internally and the manufacturing group was king. It’s hard to become a group focused on customer service when you think you know well.”
Intel did not respond to requests for comment.
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Ripple effect
Intel recently acknowledged the potential shortcomings of the deal in an SEC filing posted Monday. The company highlighted the risks it carries for investors and customers. Two groups of people depend on nature.
This transaction dilutes existing shareholders and reduces governance rights. The Trump administration said it would vote along with Inter’s interests. However, business decisions that actively exacerbate the foundations of existing investors are at odds with efforts to raise investor interest.
“If I were a shareholder, I would be disappointed,” Cassidy said. “Intel gave up another 430 million shares and diluted my shares; [they] I was able to buy it at a 20% discount. ”
Intel also mentioned the potential impact this has on international business. The company reported that 76% of the company’s revenue for last year came from outside the US.
Amid the current US-led international trade turmoil, non-US companies will need to work on whether to work with companies that are partially owned by the US government.
Transmitting a signal
Not everyone is fate and dark about recent deals. Cordeakley, managing director and senior research analyst at Benchmark Company, told TechCrunch he would not see the company’s international customers moving away from Intel.
Acree said the deal was not perfect, but said the government’s commitment to Intel’s future could give chipmakers the necessary boost, even if it’s a small step on the long road to recovery.
“Intel has been struggling for the past decade and shows that some kind of government intervention may be needed. Bail is probably too strict, but government intervention is at least seen as a stepping stone to revitalizing Intel,” Acree says. “I don’t necessarily agree that it’s everything in any way. It’s at least encouraged to know that the government supports Intel rather than challenge leadership like it did a month ago.”
Andrew Rocco, an equity strategist at Zacks Investment Research, agreed that deals with the US government could be positive. In an interview before the deal was officially announced, Rocco said this could give Intel a greater role in the administration’s current push for AI capabilities in the country through initiatives such as Openai, Softbank and Oracle’s Stargate initiative.
“Even if you get a small slice, the market will be very large and the data center and chip market will be huge,” Rocco said. “There’s room for them to succeed. This is positive. You need to have a period of five to ten years.”
Still, both analysts warned that the deal was not Intel’s savior. For a true long-standing rescue, Intel needs to look inward.
The Trump administration has argued that it will become a passive investor, but that doesn’t mean that the involvement cannot boost the business for the company, Acree said. I hope that doesn’t come from pressure or strength, but Cassidy said, it’s definitely possible.
It may not be necessary for the government to do that. Unlike higher education, Corporate America proves its willingness to lean towards the goals and policies of the Trump administration. Companies are hampering diversity, equity and inclusion programs, despite hurting themselves in the process. Since Donald Trump took office in January, the prevalence of pro-American sentiment has been saturated with advertising and corporate communications.
If the Trump administration instructs American companies to buy Intel chips and hardware, it may not have to be so convincing to have the company in place.
Acree and Cassidy said that the real test of Intel is not a trade, or even an optic of it. It’s whether Intel can raise interest in the 14A Chipmaking processor. Tan said the company will not begin production of the 14A chipmaking process.
“There is no guarantee that Intel will return to cutting-edge markets yet,” Cassidy said. “Intel has been burning cash for quite some years. I don’t know if it’s more money to buy the time to find a formula to bring them back to the cutting edge.”
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