Trump's deal not expected to save Intel

Chipmaker will need more customers

- JASPREET SINGH MAX A. CHERNEY SAYANTANI GHOSH

US President Donald Trump is injecting nearly $9 billion into Intel in exchange for a 9.9% equity stake. But the money — which the struggling chipmaker was slated to receive anyway under a federal funding act — will not be enough for its contract-chipmaking business to flourish, analysts said.

What Intel needs is external customers for its so-called cutting-edge 14A manufacturing process — a tough ask, at least in the short term.

CEO Lip Bu Tan, who took the top job in March, warned last month that the company may have to quit the chip contracting business if it does not land any big clients. "Going forward, our investment in Intel 14A will be based on confirmed customer commitments," he said.

Kinngai Chan, analyst at Summit Insights, underlined the economic rationale of Mr Tan's message: "Intel must secure enough customers' volume to go to production for its 18A and 14A nodes to make its foundry arm economically viable," he said, referring to Intel's manufacturing processes.

"We don't think any government investment will change the fate of its foundry arm if they cannot secure enough customers."

The chipmaker, once synonymous with American chipmaking prowess, has stumbled due to years of management missteps, ceding its manufacturing lead to Taiwan's TSMC and losing out on the race for artificial intelligence chips to Nvidia.