Under the leadership of its new CEO, Lip-Bu Tan, and incipient federal largesse, Intel Corporation is deeply threading the needle. Simultaneously, the company is increasing its international revenue. The company has previously taken $2.2 billion under a newish federal program to incentivize domestic semiconductor production. They plan to finalize another $5.7 billion in the near future. In addition to this, Intel has been awarded a combined $11.1 billion through a separate federal initiative.
Despite all this new federal money pouring into Intel, the company’s financial results continue to be alarming. With the big technology company now reporting $53.1 billion as its fiscal year 2024 revenue. This is a 2% decrease from last year. Alarmingly, 76% of Intel’s revenue last year was derived from international sales. This significant dependence on foreign markets is particularly concerning given continued geopolitical unrest.
A recent agreement with the U.S. Department of Commerce has made Intel’s plight even murkier. In exchange, the department can redeem up to 433.3 million shares of common stock in Intel. This makes their share equal to 10% of the company. This collaboration will only increase our national semiconductor production. Nonetheless, it could be potentially problematic for existing shareholders as it has a dilutive effect on their ownership.
Intel highlighted these concerns in its company filings, noting, “There could be adverse reactions, immediately or over time, from investors, employees, customers, suppliers, other business or commercial partners, foreign governments or competitors.”
Even former President Donald Trump applauded this deal, calling it “a wonderful Deal for America.” He emphasized the importance of building advanced chips, stating that it “is fundamental to the future of our Nation.” While these efforts are commendable and show promise, the ultimate impact as Intel implements its strategies over the next several years is unclear.
Make no mistake—Intel’s leadership needs to consider what’s at stake with this unprecedented federal support. They have challenges, such as shareholder dilution and dependence on international resources. The company now finds itself at a vital, inescapable crossroads, struggling to maintain its outbreak in a quickly-evolving tech ecosystem. Simultaneously, it aggressively addresses investor issues and helps position itself for future revenue streams.