Intel has seen its dominance in chipmaking erode as TSMC now produces nearly all of the most advanced chips crucial for smartphones and artificial intelligence (AI). In 2019, Intel controlled 84% of the PC chip market and 94% of the server market, but by 2024, those figures had dropped to 69% and 62%, respectively. Its manufacturing missteps from the mid-2010s onwards forced it to outsource production of its most advanced chips to TSMC in 2021, weakening its competitive edge against rivals like AMD and custom chip developers such as Amazon, Google, and Microsoft. Amazon alone reported that half of the new server capacity it added in the past two years was powered by its own chips.
Pat Gelsinger, Intel’s CEO from 2021 to 2024, tried to reverse the decline by splitting the company into two units—design and manufacturing—and investing $90 billion in new fabrication plants (fabs) across four U.S. states. He also secured nearly $8 billion in subsidies under the CHIPS Act to bolster this strategy. However, the foundry business struggled to attract external customers due to technical setbacks, and sales at the design division continued to fall. As a result, Intel’s manufacturing leadership slipped further, and its integrated model lost its advantage.
The new CEO, Mr. Tan, who took over in March 2025, is taking a more radical approach. He plans to cut Intel’s 109,000-strong workforce by 25% by the end of the year and delay the construction of advanced fabs in Ohio to the early 2030s. Projects in Germany and Poland have been scrapped, and Tan is shifting Intel’s focus in AI away from model training (dominated by Nvidia) toward inference—running AI models. He has also suggested that if Intel cannot secure more external customers, it may retreat from leading-edge manufacturing altogether.
Analysts estimate that Intel’s design division alone could be worth over $100 billion if sold, while the company would need more than $50 billion in investment between 2025 and 2027 to make its leading-edge foundry business competitive, especially for its new 18A process, which currently has a yield of about 10% (far from the 70% needed to break even). Selling the design arm could free up funds and make the foundry independent, potentially attracting major U.S. tech firms eager for alternatives to TSMC. With Samsung—its only other rival in advanced chipmaking—recently winning a $16.5 billion contract from Tesla, Intel must act decisively or risk becoming irrelevant in the global semiconductor race.
