To The Moon

President Donald Trump's recent demand for the resignation of Intel $Intel(INTC)$ CEO Lip-Bu Tan has sparked intense scrutiny, rooted in allegations of conflicts of interest tied to Chinese investments. Backed by Senator Tom Cotton's letter, these claims have led to a sharp drop in Intel's stock, fueling online debates about whether the controversy will push shares to new lows or if the company's woes have already bottomed out. This article assesses the gravity of the accusations, their national security implications, and the potential for further market fallout, while addressing community discussions on Intel's resilience.

How Serious is the Accusation? Extremely.

The core of Trump's accusation centres on Tan's extensive investments in Chinese tech firms, some linked to the People's Liberation Army (PLA). Reports indicate Tan invested over $200 million in hundreds of such companies between 2012 and 2024, raising questions about divided loyalties, especially as Intel receives nearly $8 billion in U.S. government funding via the CHIPS Act to strengthen domestic semiconductor production. Senator Cotton's letter to Intel's board probes whether these ties were properly vetted and if divestments occurred, emphasising Intel's role in U.S. technological independence.

These claims are serious, as they align with U.S. efforts to counter China's influence in critical technologies like AI and defence systems. Tan's past leadership at Cadence Design Systems, where the company faced penalties for export control violations involving Chinese military-affiliated entities, adds weight to the concerns. While Intel affirms Tan's commitment to national security and notes some divestitures, the lack of full transparency intensifies the scrutiny. In the context of escalating U.S.-China tensions, this isn't just corporate drama—it's a potential threat to national interests that could prompt regulatory action or funding reviews if unaddressed.

Immediate Market Fallout and Broader Implications

Trump's statement triggered an over 3% plunge in Intel's stock in pre-market trading, with shares dipping to around $19.74 and wiping out recent gains. This exacerbates Intel's ongoing struggles, including a 37% year-to-date decline driven by layoffs of 25,000 employees, factory delays, and competition from Nvidia and TSMC. Tan's strategies for turnaround, such as cost-cutting and paused expansions, now face added pressure from this controversy.

The accusations could lead to prolonged volatility, including possible investigations or a leadership change, further eroding investor confidence. Analysts suggest that while the claims highlight risks in U.S.-centric policies, a swift resolution—such as full divestiture or resignation—might stabilise the stock long-term.

Beyond the Stock Price: The Real Risk

The community's focus on the stock price is understandable, but whether it finds a new low or not is secondary to the fundamental instability this creates. A 3% drop reflects immediate uncertainty. A sustained political war with the White House could trigger a catastrophic loss of confidence.

The real risk is not a single-day price dip but a prolonged period where Intel is labelled as politically toxic. This could:

• Deter Institutional Investment: Large funds may shy away from a company in open conflict with the U.S. government.

• Impede Talent Acquisition: Top engineers and executives may be hesitant to join a company facing such profound leadership instability.

• Paralyse Strategic Decisions: How can the board and executive team make bold, long-term bets when the President is actively calling for the CEO's removal?

Intel's stock has already been underperforming compared to rivals like NVIDIA and AMD. While one might argue "there is little room for further decline," that view ignores the potential for a complete collapse in investor trust if the company is seen as being at odds with U.S. national interests.

Community Discussions: Will the Stock Hit New Lows?

Online forums, particularly on X, are abuzz with speculation: Can Intel resolve the issue before it escalates, or will Trump's "no other solution" stance drive shares lower? Some users argue the stock is already undervalued with limited downside, citing potential CHIPS Act upside and Intel's strategic importance. Others warn of further declines if the controversy lingers, potentially below $19, amid fears of investor exodus or regulatory hurdles.

In my view, the divided opinions reflect Intel's precarious position. The accusations' seriousness could indeed worsen the situation if the board delays action, but the stock's depressed levels might cushion against drastic new lows. Monitoring board responses and any governmental follow-up will be key.

Intel's Perilous Path Forward

Intel's board is now in an almost impossible position. Defying a presidential demand could lead to punitive actions that cripple the company. Yet, acquiescing to the demand and firing their CEO based on political pressure would set a terrifying precedent, effectively ceding control of their boardroom to the White House. It would signal to the entire corporate world that executive tenure is subject to political whims.

The most likely path is a desperate attempt at back-channel diplomacy, coupled with an internal review to publicly address the "conflict of interest" charges. However, President Trump's public and absolute stance—"no other solution"—is designed to shut down that very option. He has drawn a line in the silicon, and he is demanding that Intel choose a side. The resolution, or lack thereof, will not only determine Intel’s trajectory but will also serve as a defining case study for corporate America in an era of intense economic nationalism.

@TigerWire