Mark Twain once famously said “the reports of my demise have been greatly exaggerated.”
That same saying applies to the world’s third-largest semiconductor manufacturer, Intel (INTC).
Because up until a few months ago, it seemed as if the AI megatrend was leaving the old chipmaker in the dust. In addition to being left out of the “Magnificent Seven,” Intel suffered several months of bad headlines and saw share prices tank.
Many onlookers, myself included, were eager to muse about “The Death of Intel.”
But then something changed. New management arrived, and Intel pivoted faster than anyone thought possible. Fast-forward to today, and it’s one of the market’s best-performing stocks for 2026, up more than 450% in the last year!
So today, I’d like to follow up on this chipmaker and give you the full story—including whether we can expect more gains further down the line.
Let’s dive into the video:
Video transcript:
I’m Andrew Zatlin. Welcome to Moneyball Economics.
Today we are going to focus on Intel Corporation, the semiconductor giant. Intel signifies what can go right when you’ve got a pro- manufacturing industrial policy. I mean, if anything, they are the poster child for what we can call an American manufacturing renaissance, but this wasn’t always the case.
I mean, go back in time to last year. Everybody was writing Intel off. They said, “Intel, you’re on your deathbed. Your stock is trading down at $20 a share.” I disagreed. I called out this time last year that we were witnessing the death and rebirth of Intel and I had my reasons. In fact, today Intel’s trading for $120 or so per share, up almost 600%.
So what was going wrong with Intel? What’s going right and why does this speak a lot of positives for US manufacturing overall? Well, to cut to the chase, Intel had a couple things going forward.
It is an amazing manufacturing company. They have cutting edge technology, but it helped that they got a lot of government financial and other types of support. The US under Trump was very much behind Intel being successful and that helped. And then they happened to be in the right place at the right time. But let’s start with a little bit of why they were having problems.
And let’s start with a primer on semiconductor manufacturing because at the end of the day, Intel makes things. They make widgets. And when you’re making widgets, the name of the game is to make a lot of them so that you can both scale up and meet the high volume businesses, but also drive the costs down and get those sexy margins. And that’s where Intel is having problems.
When we’re talking about semiconductors, think of it as just basically making pizza and then cutting that pizza up into slices. And you’ve got some simple pizzas, cheese pizzas like memory. And then you’ve got these highly complex pizzas where you’ve got to put mushroom and anchovy, bell pepper, olives, and all these other things into every slice. You got to have the same amount per slice.
And guess what? You can make those slices as small as you can as long as they have the exact amount of toppings on it. There’s a lot of complexity to making semiconductor chips. And it’s not about cutting those platters of semiconductors, those pizza slices. It’s about ensuring that you’ve got the exact amount per slice of anchovy and pepperoni and so on and so forth.
And meanwhile, it’s getting stacked higher and higher. This requires a lot of delicate and expensive equipment. And semiconductor companies initially went down the path of being very vertically integrated. They would buy the equipment, they would maintain that equipment, and then they would design this chips to maximize that equipment and the process that they used to make those pizza slices.
Then about two decades ago, a litle bit more, a bunch of companies got their start like TSM and they said, “Look, what if we took on that burden of manufacturing and we would be a contract manufacturer, meaning you AMD or Nvidia or Qualcomm, you don’t worry about having to spend billions of dollars on equipment. We’ll take on that. You just tell us how much you need. We’ll lock you in and we’ll guarantee a certain quality of chip, a certain price. You just focus on what you do best, which is designing chips.
So you have two different models, a very vertically integrated model and a very specialized model. Well, clearly Intel was flying mostly solo in this vertical integration and it became a struggle for them. It didn’t help also that over time the high volume markets that they were pursuing like cell phones, like servers, like PCs were slowing down.
So fast forward, you’ve got a problem here.
From a business perspective, Intel spends a lot more money and is a lot less flexible when it comes to making their chips. It’s a problem for them. Meanwhile, TSM can focus on continuing to make that pizza slice smaller and smaller and smaller and maintaining the complexity. Intel is now two businesses. One’s a manufacturing business, one’s a chip designing business and they are struggling. They’re struggling because their portfolio products, it’s problematic.
On the one hand, they’re designing for servers and PCs and those markets are huge, but they’re not growing. Meanwhile, there’s this AI boom going on and they don’t have chips that fit that need, whereas other companies like Nvidia and AMD do. So Intel’s stuck. What do they do? What do they do? Well, this is where they get the benefit first of a lifeline from the US government.
There’s the CHIPS Act, which is throwing $50 billion out there. Trump government comes in, they even give more money, more billions of dollars to Intel, but they buy shares. Overall, all this money helps. Now, in return, Intel’s told you can’t build new plants in cheaper places like Czechoslovakia or Poland or wherever else you were considering.
You got to do your manufacturing here in the United States. That’s what I mean by industrial policy. The US will help Intel stay alive and in return, Intel has to be a US-based production company. Now, meanwhile, Intel is starting to benefit in a very remarkable way. They’ve got all this manufacturing capacity that’s in- house, meaning they’ve built up this ability to make lots and lots of chips, but like I said, their destinations like PCs and servers aren’t needing it as much. So they have excess capacity. And yet folks, this is the time to have excess capacity because AI is booming.
Demand for semiconductors is booming and TSMC and UMC and other contract manufacturers cannot meet the need. So here’s Intel. They now have the capacity that is required and they’ve got the cutting edge manufacturing capability. So now you’re getting folks like Elon Musk, SpaceX, and otherwise coming in and saying, “We want to order chips from you, Intel.”
This is where things get much more promising going forward.
Companies like say SpaceX are trying to lock in capacity because they need chips and they need highly complex chips. Intel can deliver. Maybe they’re a litle bit more expensive than they should be, but it doesn’t matter. It’s available and it also is boosting Intel’s business and keeping them afloat.
But what becomes even more interesting, and you may not be aware of this, is again, in that race to make the pizza slice as small as possible, TSM and Intel are going in two different directions.
Now both of them are leveraging one company called ASML. They’re over in Europe and ASML has the ability to make these slices smaller and smaller and smaller. Intel has bet on ASML’s next generation technology. TSM did not. And this is where we get an interesting edge that Intel’s going to enjoy. You see, this is a long-term bet to build a manufacturing plant for semiconductors and to bring in this next generation technology. It takes a few years.
Well, Intel made this bet a few years ago.
So starting in 2027, which quite frankly, folks, is prety much around the corner. We’re in June. Starting next year, in fact, Intel is poised to leapfrog TSMC from the technical standpoint. That is from the ability to crank out semiconductor chips because they’re going to be so, so, so much smaller than today. Intel has the ability to make more chips on one wafer to cut that pizza slices even smaller, possibly even doubling the amount of pizza they can crank out in slices that they could leapfrog TSM in terms of sales.
They can sell more widgets starting next year than TSMC can from the standpoint of high-end complex chips. So if you’re NVIDIA and you want your chips going out the door, you want them to be as small as possible for various reasons, you’re going to start looking at Intel, not only TSM. So here’s Intel now poised thanks to that lifeline from the US government.
They can now lean in and they’re getting the business and this is what makes them so exciting and they’re manufacturing in the US. So this is testimony to what happens when you have sort of a coming together of private and public sector working together. And at the end of the day, note, originally the deal with the CHIPS Act was, here’s money, do what you can.
The Trump administration came in and said, “Here’s money, but you have to support the US economy and jobs by making it here.” And Intel canceled billions of dollars of manufacturing plans that were going to happen outside of the US, new factories being built outside of the US and they made it more domestic.
This is only one story. There are many others that are basically promoting US manufacturing today and it’s going to play out over the next year or two more and more and more. It’s a huge positive for the US economy because it has legs, it has a lasting presence. So you should be bullish about the US economy, you should be bullish about the stock market. It could be bubbly, but at the end of the day, there’s a lot of growth here that is being engineered.
We’re in it to win it, folks.
Zatlin out.
Andrew Zatlin
Editor, Moneyball Economics