TLDR:
- Intel’s stock rose 13.3% in Q1 2025 despite broader market declines
- New CEO Lip-Bu Tan plans major restructuring including staff cuts and strategic shifts
- Potential TSMC partnership could revitalize Intel’s struggling foundry business
- Tariffs create mixed impact with potential benefits for domestic manufacturing but risks to global supply chain
- Intel faces challenges with its dependence on TSMC for some chip manufacturing while tariffs loom
Intel’s stock has been on a rollercoaster ride in early 2025, showing surprising resilience amid broader market turbulence. The chipmaker saw its shares climb 13.3% during the first quarter, contrasting sharply with the S&P 500’s 4.6% decline and the Nasdaq Composite’s steeper 10.4% drop during the same period.
This upward movement comes at a pivotal moment for the semiconductor giant. After years of disappointing results and market share losses to competitors like AMD, Intel is embarking on a transformation journey under new leadership.
Lip-Bu Tan, Intel’s recently appointed CEO, has wasted no time signaling a shake-up at the company. He has openly discussed plans to address what he describes as a “slow-moving and bloated middle management layer” through significant staff reductions.
Tan has also indicated a shift in Intel’s approach to artificial intelligence, an area where the company has struggled to gain traction against rivals. His message to employees about making “tough decisions” suggests a more aggressive strategy than his predecessor implemented.
Perhaps the most surprising development is the reported agreement between Intel and Taiwan Semiconductor Manufacturing Company (TSMC). Under this potential deal, TSMC would acquire a 20% stake in a new organization operating Intel’s semiconductor manufacturing facilities.
A Potential Game-Changer Partnership
This collaboration between otherwise competitors represents a dramatic shift in Intel’s strategy. TSMC, recognized globally as the premier chip manufacturer, would bring both technical expertise and management culture improvements to Intel’s operations.
The foundry business has been particularly challenging for Intel. The company has invested billions in new factories and manufacturing technology, including the development of its Intel 18A process, which is now in limited production.
This process represents the culmination of Intel’s ambitious “five nodes in four years” plan. The challenge now lies in scaling up production while securing enough clients to push the foundry toward profitability.
The potential TSMC partnership could accelerate this transition. It would combine Intel’s manufacturing infrastructure with TSMC’s technical prowess and operational efficiency, potentially creating a more competitive offering in the foundry market.
Navigating Tariff Complexities
The ongoing trade tensions add another layer of complexity to Intel’s outlook. As of early April, semiconductors remain excluded from the sweeping global tariffs announced by President Donald Trump, but the administration has indicated they may eventually be included.
This creates a mixed bag of implications for Intel. On one hand, tariffs on semiconductors from Taiwan could push chip designers toward Intel’s U.S.-based foundry services, creating new customer opportunities.
However, the existing tariffs already include semiconductor manufacturing equipment, which will increase costs for Intel as it expands its domestic manufacturing capabilities. A typical semiconductor facility requires approximately 1,200 multimillion-dollar tools, and tariffs will make this equipment more expensive to acquire.
Intel also faces exposure through its own supply chain. The company relies on TSMC for manufacturing some of its chips, including the current Lunar Lake and Arrow Lake PC processors. Any tariffs on semiconductors from Taiwan would directly impact this segment of Intel’s business.
The company plans to shift production of its next-generation Panther Lake laptop CPUs to the Intel 18A process by the end of the year, reducing its dependence on TSMC. However, this transition comes amid challenging market conditions.
Intel’s server CPU production presents additional tariff concerns. The company is moving production of its Intel 3 process node from Oregon to Ireland, which faces a 20% tariff under the current plan.
The tariffs could also have broader economic effects, potentially reducing demand for PCs and servers if they trigger an economic slowdown. This would further pressure Intel’s product business, which is already working to regain market share lost to AMD in recent years.
Market Position and Future Outlook
Intel currently holds a market capitalization of approximately $79 billion, with its stock trading around $18.14 as of April 8, 2025. This represents a significant decline from its 52-week high of $38.22.
The company’s gross margin stands at 32.66%, with a dividend yield of 1.38%. These metrics reflect the challenges Intel has faced in maintaining profitability while investing heavily in its transformation efforts.
While Intel’s stock performance in Q1 was encouraging, the company still faces substantial hurdles. The potential benefits of tariffs for its foundry business may be outweighed by increased costs and reduced demand for its products.
China represents another area of concern. Intel does substantial business in the Chinese market, and escalating trade tensions could make it difficult for the company to remain competitive against local chipmakers there. In a worst-case scenario, American semiconductor companies could face complete exclusion from the Chinese market.
The arrival of Panther Lake chips using the Intel 18A process later this year will be a critical test of the company’s manufacturing capabilities. This transition will reduce Intel’s exposure to potential tariffs on TSMC-made chips but requires successful execution of a complex production ramp-up.
For investors considering Intel, the company’s transformation efforts under new leadership and the potential TSMC partnership offer reasons for optimism. However, trade tensions and continued competitive pressures will likely create volatility in the near term.
Intel’s most recent quarterly performance suggests the market is beginning to recognize the company’s turnaround potential. Whether this positive momentum continues will depend largely on how effectively Tan can implement his strategic vision while navigating an increasingly complex global trade environment.
