Intel, once a dominant force in the semiconductor world, is facing significant struggles under CEO Lip-Bu Tan’s leadership. Despite beating revenue expectations with a $12.9 billion figure, the company reported a slight miss on earnings per share, leaving many investors anxious about its future. The company also announced a 30% workforce reduction to curb costs. This comes after Intel’s recent earnings report, where investors had been hopeful about the future of its 18A chip manufacturing process, which was expected to bolster Intel’s competitive edge. Unfortunately, Intel’s plans for 18A have shifted, with the technology now being used internally only, casting doubt on its ability to secure outside orders.
Furthermore, Intel may even scrap its 14A technology if it doesn’t win sufficient orders.
Amid these uncertainties, JPMorgan has expressed caution, warning that the company could face challenges in the second half of the year due to order pullbacks resulting from tariffs. This ‘order pull-in’ phenomenon refers to customers advancing their orders to avoid future price hikes, meaning there could be a significant drop-off in demand later in the year.
Intel’s Foundry business also appears to be in jeopardy, with the possibility of the company exiting chip manufacturing altogether and adopting a fabless model. The announcement sent shockwaves through the stock market, with shares dropping by 9%. JPMorgan raised its price target slightly to $21, but kept an underweight rating, reflecting doubts about Intel’s ability to turn things around.
These events have prompted questions about Intel’s long-term viability, especially as it faces competition from AMD, which has capitalized on its own technological advancements while Intel flounders with leadership struggles and an uncertain future. Analysts and investors are now left wondering if Intel can regain its footing or if it will fade into obscurity like so many other tech giants before it.