Is there any hope left for Intel?

The Californian tech giant has experienced several very challenging years and significant price fluctuations. The company's situation is so dire that the administration of the President of the USA has become directly involved. Many investors have long written off Intel as the leader in the microprocessor market. Is this justified?

All that glitters is not gold

To provide context to the scale of Intel's decline, it is necessary to briefly discuss its history. The company was founded in 1968, but its recent history begins around the year 2000. In the 1990s, the company made a crucial decision to focus on the personal computer market, which, in hindsight, proved to be an excellent strategic decision.

Intel's march towards market dominance began with the Pentium 4 processor, which debuted in 2000. It was an extremely turbulent period for the market, especially for tech companies. About a year after Intel went public, the dot-com bubble burst. A massive speculative bubble in the American financial market driven by the growth mania of companies related to the internet and computer technology. Intel was obviously first a beneficiary and then a victim of this trend. Intel entered the new millennium with a share price around $41. At the peak of the bubble, its valuation was at $75.9 per share, a level Intel has never returned to. From the peak, within less than a year, the company lost over 75% of its value and fell to around $18 per share.

Source: Bloomberg Finance Lp

The decline in valuations did not hinder the company's development. On the contrary, the year 2001 marked the beginning of Intel's golden era. Over the next decade, Intel became the absolute vanguard in the development of processor technology for most commercial applications. Not even a lost lawsuit over unfair market practices, which Intel lost in 2009, forcing it to pay its main rival, AMD, a settlement of $1.25 billion, could stop the company. At that time, the market did not pay much attention to this revelation, as it was preoccupied with rebuilding after the financial catastrophe of 2008.

The lessons not learned from the lost lawsuit are crucial to understanding the company's current troubles. Namely, at a certain stage of its operation, the company decided that the best way to compete was not through the development of its own products but through extremely unethical and anti-consumer monopolistic practices. This strategy worked until 2015, when Intel achieved an 80% share in the already mature microprocessor market.

From that point on, Intel began making more and more strategic mistakes. One such mistake was the refusal to collaborate with Apple in producing chips for iPhones. Intel also sold its subsidiary focused on ARM standard processors.

Intel's main competitors—NVIDIA, AMD, and TSMC—began specializing either in designing or building chips and processors. Intel stubbornly tried to do both, resulting in falling behind in both aspects of its operations.

Pride comes before a fall

The first clear signs of Intel's weakness began to appear towards the end of the second decade of the 21st century. Misguided strategies and investments led to a growing loss of competitiveness. Intel's processor factories became a financial burden, and their products increasingly lagged behind in terms of performance and price.

Ironically, a temporary respite came with the COVID-19 pandemic in 2020.

• A large portion of the human population, due to sanitary reasons, began spending most of their time at home, which translated into increased demand for consumer electronics.
• This coincided with the cryptocurrency mania. Cryptocurrency mining primarily required computing power, which Intel processors could provide. However, even then, the first choice for cryptocurrency mining was NVIDIA and AMD processors due to their power consumption-to-performance ratio, which proved to be a very significant trend and a warning signal for Intel, which it ignored.

In April 2021, on the wave of increased demand and improved company prospects, the valuation reached a local peak of $62 per share, just a few percent below the all-time highs from the dot-com bubble period.

Unfortunately, this was Intel's swan song. Since that period, the company has faced failure after failure. Strategic missteps left it far behind the competition in terms of revenue, profit, and market share. Due to decisions made a decade earlier, the company was unable to scale revenues and reduce costs to the same extent as other industry giants. Subsequent products disappointed and caused controversy. The company's financial results worsened quarter by quarter, with no prospect of improvement.

Source: Intel's Financial Statments

All of this occurred amidst a massive bull market for tech companies, driven by breakthroughs in the field of artificial intelligence.

• The results for the year 2024 showed a net loss of $19 million.
• Shares have lost over 60% of their value since the local peak.
• The company's market share continues to shrink.

Chart of Intel and Nvidia's valuation changes since the beginning of 2022:

Source: Bloomberg Finance Lp

Hope springs eternal

In 2025, the company entered under the banner of reform. A reformer, Lip-Du Tana, was appointed as CEO. The new CEO's reforms were radical, yet absolutely necessary given the current stage of the company's collapse. They included:

• Reforming the organizational structure, flattening it, and shortening the chains of command, with an emphasis on strengthening the "technical" side of the company and personal oversight of key areas by the CEO.

• Layoffs and personnel changes. Intel shed about 15% of its workforce, which amounts to approximately 25,000 employees worldwide. Some of the board and directors were replaced to ensure these positions were filled by individuals experienced and knowledgeable in the semiconductor industry. A policy was also introduced to bring employees back to the office from home-office, which was intended to increase efficiency.

• Reduction of investments and optimization of many operations. From now on, the expansion of production capacity was to be dictated by specific orders. Plans to build factories in Germany and Poland were suspended. Some assembly and packaging departments were moved to low-cost countries like Vietnam.

The market initially received the news of restructuring optimistically. Euphoria was sparked by the declaration of government support for the company and a series of rumors about potential orders and partnerships. This led to a 43% increase in stock in February this year.

Unfortunately for Intel, the market quickly realized that the new CEO's reforms focused almost exclusively on cost reduction, without clear plans on how to increase the company's profits. Hopes for new orders proved futile, and the support from the US government increasingly became a burden for Intel rather than an opportunity.

Financially, Intel's situation is unfavorable for the company and concerning for shareholders. The company is in debt and continues to incur losses, which are growing despite reforms and cost-cutting measures. The only thing the company has reduced is revenue, which fell from nearly $80 billion in 2021 to $53 billion this year. Intel remains far behind the competition in virtually every aspect. A glimmer of hope for investors might be the very low valuation ratios, especially compared to the competition and the industry. However, valuation ratios that are so low and persist for a long time are usually not without reason.


Intel's empire is besieged from all sides. The server and personal computer market is losing ground to AMD, whose chips are incomparably more efficient in terms of power consumption. The data center market is losing to Nvidia, whose solutions are currently unmatched in innovation and performance. Meanwhile, in the semiconductor manufacturing market, Intel cannot compete with TSMC, which absolutely dominates due to its scale effect and comprehensive optimization of its processes.

Uncle Sam

Both Intel and its shareholders are clinging to a significant fact that is supposed to support the company's valuation. Namely, Intel is a large, domestic semiconductor manufacturer. It is a company that, from the current strategic point of view of the US government, cannot be allowed to fail.

Everything indicates that the era of idealistic economic liberalism and free trade is ending, and every scarce good is a weapon that can be used against one's adversaries or former allies. One such good is Intel's semiconductors.

The US government noticed the company's troubles and its strategic value during the previous administration, which granted the company over $7 billion for investments in domestic production.

Primarily focused on producing processors and chips for the Department of Defense. This is a very significant issue due to the possibility of hardware vulnerabilities hidden in components that other countries could potentially exploit against users. The involvement of the US government in the company's affairs was taken to a new level by the new US president, who acquired about a 10% stake in the company for the government, which will be described in more detail in the following paragraphs. This is an unprecedented step in recent years, signaling a break in a certain taboo in American economics and politics. This change in sentiment is clearly confirmed by Secretary of State Hassett, stating that "There will be more such transactions"

Boeing 2.0

The market received the news of the US government's involvement in the company positively. Sentiment was further improved by the announcement of a large stock purchase by the Japanese investment bank, SoftBank. Riding the wave of these revelations, shares have risen by over 22% from the July low.

However, a very important question arises: is there really cause for celebration?

Firstly, it should be noted that the shares acquired by the US government were not, as some media headlines claim, purchased on the market or from Intel itself, but are new shares issued specifically for the US government, which effectively dilutes the value of existing shares, directly and negatively impacting current shareholders.

Another obstacle for Intel's valuation is the goals of the US government, which many investors seem to overlook. Primarily, the US government has no interest in caring for shareholders or the stock price. Acquiring Intel is a strategic defense initiative and an attempt to gain another negotiating lever in the trade war that the US is currently waging with the entire world.

Moreover, the current policies and decisions of the new presidential administration give no reason to suspect it possesses the skills necessary to manage a company involved in the most complex technological process on earth. The new president's administration has also shown that it is ready and able to sacrifice long-term economic and financial stability for short-term political or ideological successes.

In light of this information, Intel is slowly drawing a path similar to Boeing among semiconductor manufacturers. That is, a company that remains in the market practically only due to the high entry barrier into the business, government subsidies, and defense industry orders.

It is currently extremely difficult to outline a positive scenario for Intel's stock. There is a prospect of bouncing back from the bottom thanks to investments enabled by lower interest rates and cooperation with the government. The new CEO has also shown courage and willingness to implement radical but also thoughtful reforms that the company has needed for so long.

Lucrative contracts with the defense industry, which Intel and shareholders hope for, partnerships with better-performing companies, and the possibility of regaining some market share, or finally catching up in the field of AI, are currently speculation without a clear strategy on how these goals would be achieved. However, it is not impossible. Much will depend on government policy and Intel's place within it.