Intel's "Life and Death Line" Moment: In front of the ICU, how does Chen Liwu settle his legacy and start his self-rescue?

Written by: DaiDai, Maitong MSX

Compiled by: Frank, Maitong MSX

For Intel, 2025 is a year of life and death.

Compared to Nvidia, which is dancing in the spotlight of AI, Intel (INTC.M) is more like a foot lingering at the ICU door. With the departure of "technology evangelist" Pat Gelsinger at the end of last year, the new CEO Lip-Bu Tan has officially taken over this aging machine burdened with weight.

The latest Q4 financial report has brought a familiar question back to the surface: has this century-old chip giant reached its end?

If we only look at the stock price performance after the earnings report, the answer may be disappointing. However, if we extend the timeline, what Intel is experiencing may not be a fleeting moment of glory, but a critical moment of trying to breathe on its own after being taken off the oxygen tube in the ICU.

Objectively speaking, this Q4 financial report is not only the first complete answer sheet after Lip-Bu Tan took office but also a comprehensive reckoning of the legacy of the Kissinger era.

Intel's stock price changes in 2025, source: CNBC / Intel Newsroom

1. Change of Leadership: From Kissinger's "Technological Utopia" to Lip-Bu Tan's "Capital Battlefield"

"Survival is the first need of civilization." Before understanding this financial report, one must first see the narrative shift that Intel is undergoing.

At the beginning of Pat Gelsinger's return to Intel, he painted an almost idealistic blueprint, aiming to regain process leadership through an aggressive plan of "5 nodes in 5 years" and rebuild domestic semiconductor manufacturing capabilities in the U.S. The logic behind this was simple—if technology leads, capital will eventually follow.

Thus, large-scale factory construction spread globally: in Ohio, USA, and in Germany and Poland, capital expenditures rapidly expanded.

But reality quickly struck back. The AI wave surged, and the real star on the stage was Nvidia (NVDA.M). In the data center sector, Intel's CPUs were no longer the main characters, even being mocked as "accessories" to GPUs. Meanwhile, massive capital expenditures consumed cash flow, stock prices continued to decline, and Intel gradually fell into a dilemma of "technologically correct but financially bleeding."

So it can be said that Kissinger's departure marked the end of Intel's era of "cost-no-object pursuit of technological hegemony," while Lip-Bu Tan's arrival represents a completely different survival logic—having been the CEO of Cadence and a venture capital mogul, he understands the ways of venture capital, especially excelling in "balance sheet magic." Therefore, his logic after taking office is extremely brutal and clear: "Stop the bleeding, then go all-in on the core":

• Surgical layoffs: A global reduction of 15%, cutting down on bloated middle management;
• Strategic contraction: Halting expensive overseas factories in Germany and Poland to reclaim funds;
• Strategic focus: All resources are directed to two targets—Arizona Fab 52 and 18A process;

INTC stock price trend from Q4 2025 to Q1 2026 (source: Yahoo Finance / TradingView)

This is a typical "stop the bleeding—contract—protect the core" strategy. For Lip-Bu Tan, surviving is more important than telling stories.

2. Dissecting the Financial Report: How Much Substance is Behind This "Surprise"?

Returning to the data itself, Intel's Q4 financial report is not without merit.

On the surface, profits did exceed market expectations, with EPS returning to positive territory. Although the $0.15 profit came at the cost of layoffs, it did pull the profit statement back from the edge of a cliff, proving that large-scale cost reduction and efficiency improvement have begun to repair the profit statement, and Intel has at least temporarily escaped the danger zone of "continuous bleeding."

AI-assisted generated table

However, digging deeper reveals that problems still exist.

First, revenue is still declining year-on-year. Against the backdrop of the 2025 AI boom boosting the semiconductor industry, AMD and Nvidia's data center businesses are experiencing rapid growth, while Intel's overall revenue is still contracting. This means that the profit improvement this time comes more from "savings" rather than "earned growth."

Second, although the gross margin has rebounded to about 38%, this level remains extremely low in Intel's history. A decade ago, the company's gross margin consistently hovered around 60%, and even in recent years, it has mostly been around 50%. In contrast, TSMC (TSM.M) maintains a gross margin exceeding 50%, while Nvidia's is over 70%.

Comparison of semiconductor giants' gross margins (data based on Q4 2025 Non-GAAP)

Ultimately, the main reason for this gross margin improvement is not a return of product pricing power but rather the dilution of fixed depreciation costs after an increase in capacity utilization. Particularly in the server CPU market, Intel still needs to compete with AMD through pricing strategies, and pricing power has not truly returned to its hands.

In other words, this is a financial report of "successful bleeding control, but not yet recovered." It is akin to "overperforming" after the passing mark has been significantly lowered, essentially not changing the fact that it is still failing.

However, it is worth mentioning that the market's biggest concern previously was Intel's cash flow issues, and from this perspective, the situation has indeed improved: as of Q4, Intel held about $37.4 billion in cash and short-term investments; it repaid some debt during the quarter; and the annual operating cash flow was about $9.7 billion.

At the same time, the company secured precious time by selling part of its Mobileye stake, bringing in external capital for Altera, and receiving subsidies from the U.S. CHIPS Act. Additionally, Nvidia's $5 billion strategic investment in Intel has also released an important signal on the capital front.

Overall, Intel's cash flow crisis has been temporarily alleviated, at least allowing it to survive the most cash-intensive phase before the mass production of the 18A process.

But it is important to be cautious that this does not equate to "financial safety," but rather resembles "buying time for survival."

3. 18A and Panther Lake: The Last Chance for a Turnaround?

From a business structure perspective, Intel's current status is highly differentiated.

The client PC business remains the company's cash cow, with the PC industry's inventory cycle basically cleared, and OEM manufacturers beginning to restock, providing Intel with a relatively stable cash source. However, constrained by product structure and foundry costs, this segment is unlikely to significantly expand profit margins in the short term.

After consecutive declines, the data center and AI businesses saw about a 9% year-on-year growth in Q4, primarily driven by the competitive resurgence of the Xeon 6 platform and cloud vendors replenishing CPU resources after investing in GPUs. However, in the long-term trend, Intel's market share in the data center has significantly declined from its peak in 2021, and the current situation is more about "stopping the decline" rather than a true reversal.

The real pressure source remains the Foundry business, which suffered losses of billions of dollars in a single quarter, mainly due to high depreciation costs of advanced process equipment, the ramp-up costs of the 18A process, and the revenue from external customers not yet being realized.

It can be said that until the 18A process is scaled up for mass production, Foundry is more like a continuously bleeding wound. However, optimistically speaking, if the financial report represents the past, then the 18A process will undoubtedly determine the future and is crucial to the strategic position of the U.S. semiconductor industry.

To put it bluntly, the 18A is not just a process node; it is Intel's only ticket to reclaiming its throne.

From a technological perspective, the 18A is not a castle in the air. Its use of the RibbonFET (GAA) architecture allows Intel to catch up with the industry's mainstream in transistor structure; the PowerVia back power supply technology provides it with a temporary leading advantage in energy efficiency and wiring density. More importantly, the 18A will be applied on a large scale for the first time in the consumer platform Panther Lake.

Official data shows significant improvements in performance, gaming performance, and battery life, especially in battery life metrics, indicating that x86 laptops are for the first time approaching or even challenging the Apple Silicon camp in terms of user experience.

At the same time, Microsoft (MSFT.M) and Amazon (AMZN.M) have become anchor customers for the 18A, and Nvidia's strategic investment is seen by the market as a "geopolitical insurance endorsement" of Intel's manufacturing capabilities. Additionally, it is reported that the yield rate of the 18A is improving at a rate of 7% per month and has entered a predictable trajectory.

In contrast, TSMC is expected to apply similar technology to its A16 process by the end of 2026, which means that in 2026, Intel's 18A will be globally leading in power supply technology, making it highly attractive to energy-sensitive customers (such as Apple, Qualcomm, and AI inference chip manufacturers).

Overview of Panther Lake chip architecture and 18A (source: Intel Tech Tour)

CEO Lip-Bu Tan also stated during the conference call: "The losses in Foundry peaked in 2024 and will begin to narrow in 2025." If this goal is achieved, as losses narrow, Intel's overall profits are expected to experience explosive growth.

These may not mean victory, but at least indicate that Intel has not been completely abandoned.

4. Q1 Guidance Scares the Market? Understanding the Game Beyond the Fundamentals

On the surface, Intel's significant drop after the earnings report was almost a "textbook" market reaction.

The main reason is essentially that the Q1 2026 guidance is extremely conservative, with the revenue range falling below consensus expectations, and the Non-GAAP EPS even being compressed to 0. For short-term funds, this is equivalent to a naked signal—"Don't expect profit improvement next quarter." In a market accustomed to the "AI high-growth narrative," such guidance naturally triggers sell-offs.

However, if this is only understood as a deterioration in fundamentals, one might miss a more important layer of meaning. A more reasonable explanation is that this is a typical "Kitchen Sink" strategy from the new CEO: new CEOs often implement a "Kitchen Sink" approach to fully release negative news, lower expectations, and set the stage for subsequent surprises.

AI-assisted generated table

From this perspective, the Q1 guidance appears more like a strategic conservatism rather than a signal of operational loss of control. What is truly noteworthy is a geopolitical undercurrent that is gradually emerging beneath the surface of the financial report.

From an industry perspective, the competitive environment Intel faces at this moment is almost hellishly difficult:

• AMD (AMD.M): The Zen 6 architecture is imminent, and it still enjoys priority access to TSMC's most advanced processes, with a stable product rhythm and clear roadmap;
• NVIDIA: Blackwell remains in high demand, continuously absorbing global data center capital expenditures;
• ARM / Qualcomm: The PC side continues to encroach on x86 territory, with Apple's M series and Qualcomm's X Elite always hanging like a sword over Intel's head;

In such a landscape, Intel is unlikely to defeat all competitors through "commercial competition" in the short term, which also determines a reality: Intel's valuation logic is quietly shifting from performance-based to "system value."

AMD vs Intel CPU market share forecast (Q2 2025)

And this is the key to understanding Nvidia's $5 billion investment.

On the surface, Nvidia's investment of $5 billion in Intel seems almost counterintuitive. After all, one is the absolute king of global AI chips, while the other is still bleeding from its foundry business. However, if we step back from the financial report and look at it from the perspective of supply chain security, this transaction becomes exceptionally reasonable:

Investing in Intel and supporting its Foundry business, especially in advanced packaging and domestic U.S. capacity, is essentially purchasing a long-term "geopolitical insurance" for itself. This is not about immediately transferring orders from TSMC but rather preparing an alternative system that can be activated in advance.

And this is precisely the scenario that the White House is most pleased to see—two American semiconductor giants forming a certain degree of "symbiotic structure," reducing the entire industry's dependence on overseas single points.

This also means that even in the most intense commercial competition, Intel is still seen as an indispensable infrastructure node.

In Conclusion

Overall, this financial report is neither a signal of a comprehensive recovery nor a final judgment.

What Intel has truly accomplished is to stop telling grand narratives of technological utopia and instead return to a more realistic and brutal path: compressing scale, preserving cash, and betting on a single core variable.

Among them, 18A and Panther Lake represent Intel's "qualifying rounds"—if it wins, it still has the possibility of repricing; if it loses, this century-old giant will be completely marginalized to the role of an industry supporting character.

Ultimately, Intel is no longer the "foolish son of the landlord" who can squander capital at will, but a heavy asset enterprise that must be frugal at the ICU door.

Whether it can truly emerge from the hospital, the answer lies not in this financial report but in the execution over the next 12 to 18 months.