State subsidies became a decisive factor in Intel’s valuation and strategic choices, culminating in a formal government stake after leadership change to Lip-Bu Tan. Global subsidy competition prompted both Intel and TSMC to consider investments across the US, Europe, and elsewhere, but Intel has retreated from planned European projects. Irish capacity will remain but with a reduced workforce, and planned factories in Poland and Germany were canceled. Intel continues large US capital investments, including a new Arizona foundry, producing heavy losses against processor revenues. Lip-Bu Tan warned that future 14A investments require a major customer or will be scaled back.
Intel's share price under former CEO Pat Gelsinger was already heavily influenced by state aid. Now, under his successor Lip-Bu Tan, this influence has culminated in a formal stake in the US chip company. When the United States, the European Union, and other countries wanted to boost their chip industries in recent years, the motto was: set aside billions to charm chip companies at home and abroad into making local investments in production lines.
Although TSMC still wants to expand chip manufacturing in Europe through a joint venture called ESMC (together with Bosch, Infineon, and NXP), Intel has abandoned equivalent ideas. The existing Irish capacity will remain in place (and it existed before the chip grants), but the workforce there has declined in number, as has been the case with Intel's global workforce. However, there will be no Intel factory in Wroclaw, Poland, or Magdeburg, Germany.
Intel has confirmed several times in recent months that it does intend to continue its US expansion. Arizona, where rival TSMC is also building, will still be home to a brand-new Intel Foundry factory. These capital investments are still substantial and are resulting in deep red figures that wipe out revenues from client and server processors. CEO Lip-Bu Tan therefore stated that a major customer would have to come forward for the future 14A process, otherwise he would scale back the investments in it.
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