The Three Interlocking Problems at Intel
BenB
Challenges to Sustainability
-Credit rating. Intel credit rating was downgraded to BBB by Fitch in August 2025.
-IDM business model. This reduces the addressable market for Intel Foundry since AMD and Nvidia are direct competitors.
-Separation costs. It would be costly to separate Intel Products from Intel Foundry. This cost is not specified.
-Going concern risk. Intel has liabilities of $32 billion due within a year, and $53 billion in liabilities outstanding.
Outline of a solution
-Intel needs relief of a majority of the liabilities
-Separate Intel Products and Intel Foundry.
-Intel Foundry needs a sufficient customer base
How to achieve the solution
-Intel recently received $8.9 billion from the US Treasury in return for 10% equity stake. That cash helps but is not enough to relieve the liabilities. The liabilities in turn prevent separating Intel Product and Intel Foundry, since creditors are not all secured. And separating Intel Foundry is most likely needed to increase the addressable market for Intel Foundry, increasing the possibility of finding a sufficient customer base.
Breaking the deadlock
-Intel has large value to the USA in war. In a war between China and the US, Korea and Taiwan might remain neutral and be unwilling (or unable) to supply the US (or China). In an AI-driven drone war, Intel production of advanced nodes could be decisive since advanced AIs would defeat simple AIs. That is the goal of limiting China to N-2 advanced node production.
-While Intel would be valuable in a war, this value remains dormant at peace, and there are roadblocks to unlocking the value. These roadblock include:
-No US advanced drone supply chain
-Nvidia and AMD must produce chips in Taiwan to remain on the most advanced nodes. TSMC Arizona is N-1, better than N-2 but precariously close to it.
-SK Hynix AI HBM chips (input to Nvidia AI) is Korea or China-based
-US power grid may not be able to power advanced AI at a war (or any) scale
Solution
-US Treasury would pay off Intel debts
-This would permit separating Intel Foundry
-In return, Intel Foundry would become largely a government enterprise for the production of AI war supplies. That may mean Nvidia, AMD, Intel and Micron products. US government money would purchase these products and require their production on 14A and other future nodes. That in turn would fill Intel (and Micron) fabs.
Failure to execute this plan
-China achieves AI war dominance. This may have already happened, with Deepseek reducing the hardware requirements for the most advanced AIs.
-Intel stops advanced node development because they don’t separate Intel Foundry, limiting the market for Intel Foundry, leading to no 14A external customers.
-US advanced node production becomes N-1 to Taiwan and Korea. TSMC is only willing to provide N-1 fabs on US soil, which is precariously close to N-2 of China. It may effectively be the same as N-1 if China finds workarounds.
BenB
Challenges to Sustainability
-Credit rating. Intel credit rating was downgraded to BBB by Fitch in August 2025.
-IDM business model. This reduces the addressable market for Intel Foundry since AMD and Nvidia are direct competitors.
-Separation costs. It would be costly to separate Intel Products from Intel Foundry. This cost is not specified.
-Going concern risk. Intel has liabilities of $32 billion due within a year, and $53 billion in liabilities outstanding.
Outline of a solution
-Intel needs relief of a majority of the liabilities
-Separate Intel Products and Intel Foundry.
-Intel Foundry needs a sufficient customer base
How to achieve the solution
-Intel recently received $8.9 billion from the US Treasury in return for 10% equity stake. That cash helps but is not enough to relieve the liabilities. The liabilities in turn prevent separating Intel Product and Intel Foundry, since creditors are not all secured. And separating Intel Foundry is most likely needed to increase the addressable market for Intel Foundry, increasing the possibility of finding a sufficient customer base.
Breaking the deadlock
-Intel has large value to the USA in war. In a war between China and the US, Korea and Taiwan might remain neutral and be unwilling (or unable) to supply the US (or China). In an AI-driven drone war, Intel production of advanced nodes could be decisive since advanced AIs would defeat simple AIs. That is the goal of limiting China to N-2 advanced node production.
-While Intel would be valuable in a war, this value remains dormant at peace, and there are roadblocks to unlocking the value. These roadblock include:
-No US advanced drone supply chain
-Nvidia and AMD must produce chips in Taiwan to remain on the most advanced nodes. TSMC Arizona is N-1, better than N-2 but precariously close to it.
-SK Hynix AI HBM chips (input to Nvidia AI) is Korea or China-based
-US power grid may not be able to power advanced AI at a war (or any) scale
Solution
-US Treasury would pay off Intel debts
-This would permit separating Intel Foundry
-In return, Intel Foundry would become largely a government enterprise for the production of AI war supplies. That may mean Nvidia, AMD, Intel and Micron products. US government money would purchase these products and require their production on 14A and other future nodes. That in turn would fill Intel (and Micron) fabs.
Failure to execute this plan
-China achieves AI war dominance. This may have already happened, with Deepseek reducing the hardware requirements for the most advanced AIs.
-Intel stops advanced node development because they don’t separate Intel Foundry, limiting the market for Intel Foundry, leading to no 14A external customers.
-US advanced node production becomes N-1 to Taiwan and Korea. TSMC is only willing to provide N-1 fabs on US soil, which is precariously close to N-2 of China. It may effectively be the same as N-1 if China finds workarounds.
Their number one job is to not piss off POTUS I guess.