Intel Corporation (NASDAQ: INTC) saw its stock climb nearly 3% in early trading on Wednesday, continuing a two-day rally sparked by bullish comments from U.S. Vice President JD Vance regarding domestic chip production.
At the AI Summit in Paris on Tuesday, Vance emphasized the importance of manufacturing AI chips in the United States, reinforcing government support for strengthening the U.S. semiconductor industry. His remarks propelled Intel’s stock up by 6% on Tuesday, adding to investor optimism about the company’s role in the AI revolution.
Despite the short-term boost, Intel still faces significant challenges in regaining its dominance in semiconductor manufacturing. The company is far behind Taiwan Semiconductor Manufacturing Company (TSMC) in advanced AI chip production and is currently undergoing major leadership changes after the ouster of CEO Pat Gelsinger in December 2024.
The Growing Push for U.S.-Made AI Chips
Intel’s stock rally was largely driven by Vance’s remarks about prioritizing domestic chip manufacturing to secure America’s technological advantage.
“To safeguard America’s advantage, the Trump administration will ensure that the most powerful AI systems are built in the U.S. with American-designed and manufactured chips,” Vance stated at the summit.
While the statement aligns with U.S. efforts to boost domestic chip production, it remains unclear how such a mandate would be enforced. Former President Donald Trump has previously criticized the CHIPS Act, a federal initiative providing financial incentives for semiconductor manufacturers to build in the U.S. Instead, Trump has suggested imposing tariffs on chip imports to encourage domestic production.
“You put a big tariff on the chips coming in. I say, ‘You don’t have to pay the tariff, all you have to do is build your plant in the United States,’” Trump said during an appearance on The Joe Rogan Experience in October 2024.
The U.S. government has invested heavily in repatriating semiconductor manufacturing, with Samsung and TSMC both expanding operations in the country thanks to CHIPS Act subsidies. However, the majority of AI chips are still produced in Taiwan, leaving the U.S. dependent on foreign supply chains.
Intel’s Struggles in AI Chip Manufacturing
Intel is the only large-scale American leading-edge foundry capable of producing advanced semiconductor chips for AI applications. However, it has fallen significantly behind TSMC in manufacturing technology.
Even Intel itself outsources production of its most advanced AI chips to its Taiwanese rival, highlighting its difficulties in competing with TSMC’s cutting-edge fabrication processes.
Current and former employees at Intel have reported ongoing challenges with the company’s AI chip production, with insiders stating in December that its latest manufacturing process has “a lot of issues.”
Intel’s commitment to expanding its foundry business has also been called into question. The company’s aggressive push to open up its chip-making operations to external customers was a key strategy under CEO Pat Gelsinger. However, investor impatience with the company’s unprofitable foundry business led to his removal in late 2024. Intel is currently searching for a new CEO to lead its turnaround efforts.
Adding to its struggles, Intel’s AI division recently lost a key executive, with its AI chief leaving to become CEO of Nokia.
Financial Performance and Market Position
Despite the recent rally, Intel’s stock remains down more than 50% from last year, and its market capitalization of $91 billion is significantly smaller than its Big Tech rivals.
The company has reported three consecutive quarters of year-over-year revenue declines, with its latest earnings release in January 2025 showing continued financial pressure.
Intel CFO David Zinsner has stated that the company is aiming to make its foundry division profitable by 2027, a target that investors remain skeptical about given its current manufacturing challenges and fierce competition from TSMC and Samsung.
What’s Next for Intel?
Intel’s long-term success will depend on its ability to overcome manufacturing delays, regain technological leadership, and execute a sustainable foundry strategy.
While government support for domestic chip production is growing, it remains to be seen whether policy measures like tariffs or subsidies will be enough to help Intel catch up with TSMC and Samsung.
With leadership changes underway and significant restructuring efforts in progress, Intel is at a critical juncture. Investors will be watching closely to see if the company can successfully execute its AI and foundry strategies while navigating the highly competitive semiconductor landscape.
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