Intel faces a major threat to its plans

Even in a booming tech market, the future can sometimes appear questionable for companies outside the Magnificent 7. 

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One tech manufacturer that is likely often reminded of that is Intel  (INTC) . Once an industry powerhouse, the former sector leader has struggled significantly over the past year, watching shares trend downward as rivals ride the artificial intelligence (AI) wave to impressive heights. 

Intel is in focus today after reporting Q4 earnings and full year financial results for 2024. The company slightly beat Wall Street estimates on both earnings-per-share (EPS) and revenue but came up short on Q1 guidance. 

INTC stock fell today on these mixed results indicating that the market isn’t optimistic about Intel’s chances for growth. However, on the earnings call, interim co-CEO David Zinsner revealed he is optimistic that a looming decision from Capitol Hill, which stands to impact chipmakers, won’t harm Intel.

U.S. President Donald Trump has been signing a lot of executive orders since his inauguration, including one that may negatively impact chip stocks. Photo by Anna Moneymaker/Getty Images)

Anna Moneymaker/Getty Images

Chipmakers are anxiously waiting for a White House update

Since before he returned to the White House, it’s been clear that Donald Trump’s presidency is largely seen as a bullish indicator for tech stocks. His decisions to name Tesla  (TSLA)  CEO Elon Musk and former PayPal  (PYPL)  COO David Sacks to his cabinet have likely reassured investors that his policies will favor tech companies.

But now that he is back in power, Trump is focused on rolling back almost everything done by his predecessor, President Joe Biden. 

That includes attempting to freeze all federal loans and grants, a decision that stands to impact many federally funded organizations but it also means that statutes such as the CHIPS and Science Act could be in danger. 

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Signed into law by Biden in August 2022, the act is aimed at spurring growth for domestic semiconductor producers. As part of it, the U.S. government allocated $28 billion in new funding to be dispersed among tech companies over the coming decade.

This included Intel, which received a $7.86 billion funding award as part of the CHIPS Act with a 25% investment tax credit. Other recipients included Taiwan Semiconductor Manufacturing  (TSM)  and Micron Technology  (MICR) , who received $6.6 billion and $6.1 billion respectively. 

Following Trump’s attempt to freeze federal funding, it is unclear if the rest of the CHIPS Act funding packages will be given out. While a D.C. judge has temporarily blocked Trump’s plan, Bloomberg reports that the CHIPS Act will be impacted if the ban proceeds, according to sources.

Despite this questionable outlook for U.S. chipmakers, Zinsner doesn’t seem worried. On the Intel earnings call, he stated that the company has “already received $1.1 billion in Q4 and have received an additional $1.1 billion in January of Q1.” 

He adds that his team is looking forward to continuing its engagement with the Trump administration and helping “support their efforts to strengthen U.S. technology and manufacturing leadership.”

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This suggests that Zinsner and the Intel leadership team are optimistic that the company won’t be negatively impacted. But what gives them this confidence that Trump won’t continue the freeze and halt the money allocated for chipmakers in the process?

What does Trump’s presidency mean for chip stocks? 

Jeff Le, Vice President, Global Government Affairs and Public Policy of SecurityScorecard shared his take with TheStreet on what Trump’s plans to freeze federal funding are likely to mean for CHIPS Act funding recipients.

“The Constitution makes it clear that money that is appropriated and then signed into law must be obligated and dispersed per the intent of Congress and the enacted law,” he states. “Congress controls the purses and acts as a co-equal branch of the U.S. Federal Government.”

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As Le sees it, Congress isn’t likely to be on board with Trump’s plans to freeze federal funding for U.S. chipmakers. “ It is billions of dollars of investment in their key districts and is critical for the industrial and AI race vs. China,” he notes. 

In Le’s view, these funding reductions for companies such as Intel could severely impact key congressional districts, leading to fewer jobs. He speculates that this is likely a primary reason why Intel’s leaders aren’t worried about losing out on grant money. 

Additionally, Trump may have even more incentive to not stand in the way of U.S. chipmakers building and scaling domestic operations. 

“A funding freeze could cripple U.S. efforts to catch up in advanced manufacturing, potentially driving more production to China in the long run, exactly the opposite of Trump’s stated goals,” states Dev Nag, CEO of QueryPal. 

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