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Semiconductor giant Intel (NASDAQ: INTC) has a new CEO ready to shake up the company after years of disappointing results. Intel has been losing market share to AMD in its core CPU businesses, struggling to gain a foothold in the AI accelerator market, and pouring billions into new factories and manufacturing technology. That heavy spending supports the company's effort to become a major foundry, making chips for others and competing directly with TSMC.
Intel is making progress on the foundry front. The Intel 18A manufacturing process, the capstone of its original "five nodes in four years" plan, is fully developed and now in limited production. The challenge for Lip-Bu Tan, Intel's new CEO, will be to scale up production while winning enough new clients to push the foundry toward eventual profitability.
Tariffs are a mixed bag for Intel
As of Tuesday, the sweeping global tariffs announced by President Donald Trump exclude semiconductors. TSMC is based in Taiwan, although it now has some manufacturing facilities in the U.S. Essentially every major chip designer, including AMD, Nvidia, Apple, and countless others, relies on TSMC to manufacture their cutting-edge chips.
The Trump administration has indicated that tariffs would eventually apply to semiconductors as well, although the timing and severity is up in the air. If this happens, an argument could be made that Intel's foundry could benefit as potential customers gain a stronger incentive to choose the Intel 18A process. However, there are some important caveats.
First, the tariffs already include semiconductor manufacturing equipment, which will make it more expensive for Intel to expand its U.S. manufacturing facilities. According to Intel, a typical semiconductor manufacturing facility requires around 1,200 multimillion-dollar tools. With U.S. tariffs set to hit nearly every country around the world, scaling up the Intel 18A process and bringing future processes to production is going to become even more capital intensive.
Second, tariffs could boost prices and reduce demand for PCs and servers. That would hit Intel's product business, which is already struggling to regain lost market share from AMD. PC sales are already sluggish following a pandemic-era boom, and the situation could get much worse if these tariffs trigger an economic slowdown.
Third, Intel itself is a significant customer of TSMC. The manufacturing of Intel's Lunar Lake and Arrow Lake PC chips is largely outsourced to TSMC, so a tariff on semiconductors from Taiwan would directly hit Intel's PC chip business. Panther Lake, Intel's next-generation laptop CPU, will switch to the Intel 18A process. However, Panther Lake won't arrive until the end of the year.