Intel has found itself on the defensive following a social media post from US president Donald Trump, who last week called for the company’s CEO to resign.
The chipmaker has been struggling and announced in July that it would be slowing down expansion of one of its US sites in Ohio due to lower forecasted demand. It has also stopped plans to build a major facility in Germany, with a site in Poland also dropped, which is a major blow to the European Union (EU).
Neither the US scale-back or the decision to drop its planned European expansion are good news. The rhetoric and tariff policies from the White House suggest the US government will exert force on chipmakers to set up major manufacturing in the US or face tariffs, which would see the cost of semiconductor components used in US manufacturing double in price.
EU chip plans scuppered
The EU previously portrayed the chipmaker’s plans to build out manufacturing in the region as a major win, helping to pave the way to a secure EU semiconductor supply chain and enable Europe to achieve 20% market share in the semiconductor sector by 2030.
But Intel’s plans to expand are being curbed by the reality that its business is not growing fast enough to justify the immense expense needed. The company recently announced job cuts in its foundry business, which makes chips for other companies.
“The layoffs impacting foundries around the world could reflect more than just cost-cutting – for example, it could be down to taking a more strategic focus on specific fabric technology and capacity,” Forrester senior analyst, Alvin Nguyen, noted.
However, in the very near term, it is the future of its CEO that is the big question.
Political pressure
In a post on the Truth Social network, Trump wrote: “The CEO of Intel is highly conflicted and must resign immediately. There is no other solution to this problem.”
Trump’s post follows a letter from senator Tom Cotton (R-Arkansas) sent to Intel’s board of directors chairman Frank Yeary. In the letter, Cotton expressed concern over Intel CEO Lip-Bu Tan’s investments and ties to semiconductor firms that are reportedly linked to the Chinese Communist Party and the People’s Liberation Army. Cotton pointed out that prior to his role at Intel, Tan was CEO of Cadence Design Systems, which recently pleaded guilty to illegally selling export-controlled American technologies to entities connected to the Chinese military.
In response to Trump’s call for his resignation, the Intel chief sent a letter to all employees stating his commitment to the chipmaker, saying: “The United States has been my home for more than 40 years. I love this country and am profoundly grateful for the opportunities it has given me. I also love this company. Leading Intel at this critical moment is not just a job – it’s a privilege.
“This industry has given me so much, our company has played such a pivotal role, and it’s the honour of my career to work with you all to restore Intel’s strength and create the innovations of the future. Intel’s success is essential to US technology and manufacturing leadership, national security and economic strength.”
Tan said Intel would be “engaging with the administration to address the matters that have been raised and ensure they have the facts”, adding: “I fully share the president’s commitment to advancing US national and economic security, I appreciate his leadership to advance these priorities and I’m proud to lead a company that is so central to these goals.”
The attack on the Intel chief comes at a time when the Trump administration is introducing 100% tariffs to deter manufacturers from using semiconductor products manufactured outside of the US.
Last week, Apple announced it was making a $100bn of new investment in the US, which accelerates its plans to invest $600bn in the US over the next four years. It is believed main chip suppliers Samsung and TSMC are both ramping up efforts to supply US-manufactured semiconductors.
Intel’s strategy to continue to manufacture chips requires huge up-front costs, which it cannot justify unless there is significant growth in demand for its technology.
In his prepared remarks for the company’s second quarter of 2025 results filing, Tan said: “Unfortunately, the capacity investments we made over the last several years were well ahead of demand and were unwise and excessive. Our factory footprint has become needlessly fragmented. We will grow our capacity based solely on volume commitments and deploy CapEx [capital expenditures] lockstep with tangible milestones and not before.”
As part of this new strategy, he said Intel would no longer be building fabs in Germany and Poland, and it would be “slowing the pace of construction in Ohio to ensure our spending is aligned with market demand”.
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