By Sean McLain and Robbie Whelan
When President Trump promised Intel nearly $9 billion and gave it his vote of confidence as an America-first tech company, it looked like the start of a new era. Investors assumed new orders would flow to the troubled chip maker and bid up the stock 120% in just five months.
And customer demand for Intel's products did explode -- but Intel wasn't ready for it. After months of cutting capacity on its older production lines, the company was unprepared for a surge of orders for processors to put in AI data centers. Intel's stock has crashed 17%, wiping out more than $46 billion in market value, since executives revealed the flub on the company's fourth-quarter earnings call Thursday.
"The stock went vertical on vibes and tweets," said Stacy Rasgon, a semiconductor analyst at Bernstein. "In theory, they should be in place to capitalize on this demand, but they're not. What a shame."
It turns out it takes more than a vote of confidence from the White House and good vibes to fix Intel's business.
For a time, the Trump administration's deal to convert federal grants to Intel into a U.S. stake in the company succeeded in changing the narrative around it, as SoftBank injected an additional $2 billion and Nvidia entered into an agreement to design custom chips.
But investors who tuned into the earnings call hoping to see evidence that Intel was making forward progress in its money-hemorrhaging foundry business, or otherwise getting a boost from the artificial-intelligence boom buoying the entire tech sector, instead got a reminder of the deep operational problems that left the once-great chip maker in need of a rescue in the first place.
Intel still has no customer lined up for its next-generation chip-fabrication technology, known as 14A. In a chicken-or-egg dilemma, it is holding off on investing in new facilities until it has a customer, pushing back its timeline as its top competitor in manufacturing, TSMC, pours capital into new U.S. chip-fabrication plants, or fabs.
And what should have been an easy win for the company -- surging demand from AI data centers for its central processing units, or CPUs -- was squandered owing to a lack of available supply.
"I'm disappointed we were not fully able to meet the demand from markets, " Intel Chief Executive Lip-Bu Tan said on the call.
"It's just literally hand-to-mouth, what we can get out of the fab and what we can get to customers is how we're managing it," said Chief Financial Officer David Zinsner.
Some of the failures can be traced back to problems Tan inherited when he took over in March from his predecessor, Pat Gelsinger, who retired in December 2024. Under Gelsinger, Intel committed billions to building costly new fabs to service customers that never materialized.
That left the company unable to sustain the enormous costs of its manufacturing business, which lost more than $10 billion last year. Meanwhile, Intel has largely sat out the AI revolution, failing to develop chips that are suited to advanced computing.
Tan has sought to dig Intel out of its hole. In July, the company said it would lay off 15% of its workforce, scrap plans for billions in spending on new fabs in Europe and further delay a manufacturing plant it is building in Ohio.
The company has also been seeking to cut costs by capping spending on older technology and being more cautious about how it expanded manufacturing capacity for its latest chips.
To date, the focus of much AI spending has been graphics processing units, or GPUs -- the type of processors that designers like Nvidia and Advanced Micro Devices specialize in -- which allow software developers to accelerate computing by performing billions of tasks in parallel.
Over the past year, Intel has retired expensive tools used to make its older generations of data center CPUs, including those from its Emerald Rapids and Granite Rapids series.
But over the course of the second half of 2025, companies such as OpenAI, Amazon Web Services and Google began to realize that deploying generative AI models required more and better CPUs, which act as the central computing brain of most servers, than they had initially thought.
Suddenly, Intel was fielding requests to buy thousands of older CPUs. But because it had taken so much manufacturing capacity offline, the company was unable to meet that demand.
In July, Intel took a nearly $800 million impairment charge, in part due to selling off older manufacturing machinery at a loss, which the company believed it no longer needed. Zinsner told analysts that the company was selling "mostly older tools that we just couldn't find a purpose for."
Three months later, Intel said it had been hit by a wave of orders for those chips, but was reluctant to add more manufacturing capability.
"Obviously, we're not looking to build more capacity there and so as we get more demand, we're constrained," Zinsner said on a call with analysts in October. "In some ways, we're living off of inventory."
Intel now says its stockpile of those older CPUs is exhausted, and it is scrambling to find ways to speed up production.
"What we're devoting more of our dollars to is tools. So, we are ramping up tool spending quite a bit in 2026 relative to 2025 to address this supply shortfall as well," Zinsner said Thursday.
"They either didn't see the demand or didn't believe it was real," said Bernstein's Rasgon. "They had an opportunity to provide a lot of supply and they didn't. That's disappointing."
Inside Intel, top executives have urged patience in the search for new customers for the 14A manufacturing process, which the company is counting on to help it catch up in AI computing but isn't expected to enter into full production until at least 2028 or 2029.
Tan, the CEO, has devoted significant time and attention to efforts at attracting a major customer, but the company doesn't expect to announce a customer deal per se, according to a person familiar with the matter.
Instead, Intel plans to announce increased capital spending on its 14A technology as a way of signaling that it has signed up new partners, this person said, an announcement that isn't expected until the latter half of this year, at the earliest.
"We are on a multiyear journey. It will take time and resolve," said Tan.
Write to Sean McLain at sean.mclain@wsj.com and Robbie Whelan at robbie.whelan@wsj.com
(END) Dow Jones Newswires
January 23, 2026 21:00 ET (02:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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