Intel has reported six straight quarterly losses, including $2.9 billion in Q2 2025. For the full year 2024, it reported a loss of $18.8 billion, its first annual loss since 1986. Its free cash flow has been negative since 2022, burning through more than $15 billion in 2024 alone. This was due to a substantial increase in capital expenditure amid lower revenues. On Nasdaq, Intel’s share prices have halved in the past five years, while its key rival AMD’s doubled.
The US government, under President Donald Trump, believes that the fund infusion will help. Soon after the investment deal, US Commerce Secretary Howard Lutnick posted on X saying, “This historic agreement strengthens US leadership in semiconductors, which will both grow our economy and help secure America’s technological edge.”
However, for that to happen, Intel will have to turn around, and that is a challenge. Intel is struggling to make inroads into the booming GPU (graphics processing unit) market. The competition in its core CPU (central processing unit) market is intensifying. Its manufacturing business is struggling. Most importantly, the government ownership itself might add to its problems.
Market shift
The AI chip market is dominated by GPUs, where Nvidia controls a 94% share, driven by its technology ecosystem and high-performance products like the H100, according to a recent Jon Peddie Research report. Intel’s Gaudi GPUs are marketed as cheaper alternatives, but they have failed to gain traction against Nvidia’s dominance and AMD’s rise.
Intel’s traditional strength lay in CPUs for PCs and servers. But as AI shifted demand to specialized processors optimized for complicated workloads, Intel remained focused on CPUs. Intel also rejected an opportunity to invest in OpenAI in 2018, reflecting its scepticism on GenAI. Its late pivot meant it missed the AI chip boom of 2023-24.
Intel’s grip on the CPU market is weakening as AMD intensifies competition in desktops and servers. Once outselling AMD by the 9:1 ratio, Intel’s lead has shrunk to just 2:1 in desktops, with AMD grabbing record revenue share. In servers, Intel still leads shipments, but AMD dominates high-end growth.
Foundry gamble
Intel’s bid to rival Taiwan’s TSMC through a contract foundry business is straining its finances. The company spent $23.9 billion on capex in 2024, but Intel Foundry posted only $4.4 billion in Q2 2025 revenues, up 3% year-on-year and still unprofitable. High costs and weak yields on the 18A process node, Intel’s chip-making technology, have limited its appeal for external customers, with CEO Lip-Bu Tan conceding it may mainly serve Intel’s own products.
The company has struggled to secure anchor customers, a critical plank of its strategy. The lack of demand for 18A and uncertainty over offering the 14A node, its next-generation technology, to outsiders underscores the weakness. In 2025, Intel cancelled projects in Germany and Poland, slowed Ohio factory construction, and consolidated Costa Rican operations into Vietnam and Malaysia to cut costs.
Its overall headcount, including subsidiaries, dropped by over 15,000 to 108,900 people in 2024. It’s expected to be down by another 25,000 people by the end of this year.
Deal strings
The government stake could add to Intel’s woes. It earns over 75% of its revenue overseas, with China alone contributing 29% in 2024. In an August 2025 filing, it warned that the US government’s $8.9 billion equity stake could trigger “adverse reactions” from international customers and partners. Chinese clients, wary of the US influence, may cut demand, threatening a key revenue stream.
The deal also came with a warrant allowing Washington to raise its holding by 5% if Intel’s ownership of its foundry business falls below 51%. This effectively limits Intel’s ability to spin off or restructure its loss-making foundry arm—an option analysts had seen as a path to recovery.
While the infusion shores up Intel’s balance sheet, it doesn’t resolve core problems: negative $15.7 billion free cash flow in 2024, low-yield 18A process struggles, and steep competition from AMD and Nvidia, which continue to chip away at Intel’s CPU and AI markets.
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