Intel: From Laggard to Contender
Intel Corporation, once the undisputed leader in the semiconductor industry, has been falling behind rivals such as Nvidia, AMD, IBM, and Taiwan Semiconductor over the past four years. Innovation missteps, delays in chip manufacturing, and a failure to capture emerging growth markets like artificial intelligence (AI) have left Intel trailing its peers and underperforming the broader market.
But after years of stagnation, Intel may finally be at a turning point. With bold restructuring moves, high-profile partnerships, and unprecedented government backing, the company is quietly positioning itself for a comeback that could reignite investor confidence.
Years of Underperformance and Mounting Losses
Intel’s struggles have been laid bare in its recent financials. In the second quarter, the company reported a net income loss of $2.9 billion, a steep deterioration from the $1.6 billion loss recorded in the same quarter last year. Revenues were essentially flat year over year, underscoring Intel’s difficulty in capturing growth while its competitors thrive.
The lack of innovation has been a critical weakness. Intel’s delays in advanced chip design ceded leadership to Nvidia and AMD, whose products dominate the AI, data centre, and gaming markets.
Intel’s Tough Love: Jobs Out, Accountability In
CEO Lip-Bu Tan has promised a “fundamental transformation” of Intel, emphasizing transparency and accountability. To cut costs and refocus resources, Intel announced plans to reduce its workforce by 15%, roughly 25,000 jobs by the end of 2025, leaving it with about 75,000 employees.
Other restructuring steps include a four-day-a-week return-to-office mandate, designed to restore collaboration and execution discipline, as well as the closure of its underperforming automotive business. These actions are painful in the short term but aim to create a leaner and more focused organization.
Intel’s New Playbook: Turning Rivals into Partners
Beyond internal restructuring, Intel has been actively seeking external partnerships and capital for its revival. The company has approached Apple about potential collaboration and investment. Although Apple transitioned fully to its in-house M-series chips in 2023, a closer relationship could provide Intel access to strategic markets it has lost in recent years.
Intel has reached out to multiple companies to secure partnerships that could accelerate its turnaround. These efforts culminated in one of the most surprising announcements in the semiconductor industry in years.
In a landmark deal, Nvidia announced a $5 billion equity investment in Intel, acquiring shares at $23.28 for an estimated 4% stake once new shares are issued. The news sent Intel stock soaring 22% in a single session to $30.57 on the 18th of September, while Nvidia shares gained 3.5%.
The companies will work to seamlessly connect NVIDIA and Intel architectures through NVIDIA NVLink, combining NVIDIA’s AI and accelerated computing capabilities with Intel’s leading CPU technologies and x86 ecosystem to deliver advanced solutions for customers.
For data centers, Intel will develop NVIDIA-custom x86 CPUs, which NVIDIA will integrate into its AI infrastructure platforms and bring to market.
For personal computing, Intel will produce x86 system-on-chips (SOCs) that incorporate NVIDIA RTX GPU chiplets, offering them to the market. These new x86 RTX SOCs will power a broad range of PCs requiring the seamless integration of top-tier CPUs and GPUs.
Nvidia’s $5 billion investment in Intel addresses supply constraints as Taiwan Semiconductor can only expand production by $4 billion per quarter, capping down Nvidia’s growth. Intel’s advanced fabs will help Nvidia meet soaring global demand for AI and high-performance computing.
Intel’s Government and Institutional Backing
Intel’s deal with Nvidia followed a series of high-profile investments. The White House has directly intervened to support Intel, underscoring the company’s strategic role in the U.S.-China technology rivalry. Semiconductors are now viewed as critical to national security, making Intel’s recovery not just a corporate issue but a geopolitical imperative.
In August, the Trump administration invested $8.9 billion in Intel common stock, securing a 10% ownership stake as part of the CHIPS Act. The U.S. government having a stake in the company could boost the chipmaker’s global sales.
Around the same time, SoftBank Group invested $2 billion in Intel, reinforcing institutional confidence in the company’s turnaround strategy. The combination of government and private sector backing highlights Intel’s central role in U.S. efforts to secure semiconductor supply chains and strengthen national security.
Source: TradingView
Technical Analysis
Intel’s share price surged more than 67% year-to-date and is one of the best performing companies in the semiconductor industry this year. The price rallied from a low of $18.97 on the 1st of August to an intra-day high of $36.30 on the 26th of September, marking a 91% increase. The rally broke out of a year long consolidation, suggesting that the prior down trend might be finally reversing course. While initial resistance around $37 might be encountered, the impulsive nature of the current rally shows improved momentum and points to higher price levels in the year ahead. Over the long-term, a re-test of the long-term down trend line crossing at $40, followed by extension of the rally to $45 appears likely.
Outlook: A Long Road Ahead
The recent deal between Intel and Nvidia appears more transformative for Intel as it puts back the company in the AI race after years of stagnation, though successful execution will be key.
While Intel share price surge on growing optimism for a turnaround, the road ahead remains challenging. Intel must prove it can deliver competitive products in AI and high-performance computing while managing its restructuring effectively.
The combination of fresh partnerships, massive government and institutional support, and structural demand growth for AI and semiconductors creates a unique setup for Intel and could mark the inflection point investors have been waiting for.
After years in the wilderness, Intel may finally be positioning itself not as a laggard, but as a credible player in the next phase of the semiconductor industry.
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