intel's bumpy start: weak forecast, ceo meets with tsmc amid trade worries
Santa Clara, Friday, 25 April 2025.
intel shares took a 5% dive after a disappointing revenue forecast. this coincides with ceo lip-bu tan’s efforts to strengthen ties with tsmc. the forecast predicts revenue between $11.2 billion and $12.4 billion. the cfo pointed to trade tensions and tariffs as key factors. these issues increase the risk of an economic slowdown. intel is also planning major layoffs, potentially impacting 20% of its workforce, and cutting capital expenditure by 10% to $18 billion.
Trade tensions and financial outlook
Intel’s CFO, David Zinsner, highlighted that fluid trade policies and regulatory risks are increasing the likelihood of an economic slowdown and a potential recession [1]. He noted that the biggest risk involves a pullback in investment and spending as businesses and consumers react to higher costs and economic uncertainty [1]. Michelle Johnston Holthaus, CEO of Intel Products, stated that macroeconomic concerns and tariffs are causing everyone to hedge their bets regarding inventory [1]. These factors contribute to a wider-than-normal range in Intel’s revenue forecast, reflecting the uncertainty in the market [1].
Cost-cutting measures
In response to the challenging outlook, Intel is implementing significant cost-cutting measures [4]. Layoffs, potentially affecting up to 20% of the workforce, are scheduled to begin in the second quarter [4]. The company aims to reduce its non-GAAP operating expense target to approximately $17 billion in 2025 and $16 billion in 2026 [4]. Intel plans to slash $1.5 billion in operating costs over the next two years [4]. These measures reflect a strategic shift towards improving the balance sheet and prioritizing financial stability [4].
Strategic partnerships and idm model
CEO Lip-Bu Tan has been actively engaging with key industry players, including TSMC, to explore collaboration opportunities [2][3]. Tan views TSMC as a valuable partner and aims to create mutually beneficial partnerships [3]. Intel has been struggling to expand its foundry business [2]. Many U.S. chip companies operate with a fabless model, focusing on design and outsourcing production [2]. Intel maintains its integrated device manufacturing (IDM) model, handling both design and production [2]. However, Intel lags behind TSMC and Samsung in market share and chip manufacturing technology [2].
Analyst perspectives and market impact
Intel’s Q2 revenue forecast of $11.2 billion to $12.4 billion fell short of analysts’ expectations, which averaged $12.82 billion [4]. The company anticipates second-quarter per-share adjusted profit to break even, a stark contrast to estimates of 6 cents per share [4]. The disappointing guidance and strategic shifts have raised concerns among investors, leading to a stock sell-off [1]. The company’s CFO also mentioned that tariffs increase the chance of an economic slowdown [1]. He also stated that U.S. trade policies and regulatory risks have increased the chance of an economic slowdown [1].