Why the US government is not the savior Intel needs

Summary

The Trump administration made an unprecedented, and confusing, move last week when it announced plans to convert money Intel was supposed to receive through Joe Biden-era government grant programs into a 10% equity stake.While it remains unclear if converting those government grants into equity is even possible — that’s up for debate — it’s even less obvious how this move will solve Intel’s biggest problem, its waffling foundry business. Even Intel is unconvinced. Intel Foundry, which manufactures custom semiconductors for outside customers, has not been fruitful for the company. The business division lost out on potential big contracts, like one with Sony, according to Reuters, and has cost the company significantly more than it has brought in. Intel Foundry reported an operating income loss of $3.1 billion in the second quarter. The company has also laid off thousands of people since the beginning of the year, with the foundry business unit being hit especially hard. Differences over how Intel would turn around its struggling foundry business was partially responsible for Lip-Bu Tan’s resignation from the company board in August 2024. Tan was appointed CEO in spring 2025. Kevin Cassidy, a managing director at Rosenblatt Securities, told TechCrunch he doesn’t see how this deal will solve Intel’s problems. Intel Foundry doesn’t need money to solve its issues, he said, instead it needs to change its approach to its customers. “They didn’t understand customer service,” Cassidy said of Intel Foundry’s struggles to sign customers. “They have always manufactured internally, the manufacturing group was king. It’s hard to be a customer service-focused group when you think you know better.” Intel did not respond to a request for comment. Techcrunch event San Francisco | October 27-29, 2025 Ripple effect Intel recently acknowledged the potential downsides of this deal in an SEC filing posted Monday. The company highlighted the risks it carries for its investors and customers...