Mumbai, January 25: Intel CEO Lip-Bu Tan issued a candid admission to investors this week, expressing disappointment over the company’s inability to meet surging market demand. The semiconductor giant reported a fourth-quarter net loss of USD 333 million, as it continues to grapple with a combination of manufacturing yields that are not up to standard and heavy spending required to scale its foundry operations.

While the company beat Wall Street’s expectations for the final quarter of 2025, reporting revenue of USD 13.7 billion against a projected USD 13.4 billion, investors were unsettled by a weak first-quarter forecast for 2026. Intel shares fell as much as 17 per cent on Friday, marking the worst single-day decline in 17 months, after the company warned that first-quarter revenue could drop to between USD 11.7 billion and USD 12.7 billion. Intel Work From Office Mandate: CEO Lip-Bu Tan’s Memo on Job Cuts Reveals End of Work From Home, Employees To Return Office by September.

Manufacturing Yields and Supply Shortages

A key factor behind Intel’s current difficulties is low manufacturing yields, referring to the proportion of usable chips produced from each silicon wafer. CEO Tan acknowledged that while yields are progressing in line with internal roadmaps, they remain below the efficiency levels required to meet strong demand from the AI and data centre markets. This shortfall has been compounded by the depletion of much of the company’s existing inventory during the fourth quarter. Chief Financial Officer David Zinsner said the supply crunch is expected to be most pronounced in the first quarter of 2026, before improving gradually in the spring. The company is racing to secure additional equipment to ramp up production, although any meaningful increase in output from new machinery is unlikely before 2027.

Foundry Division Struggles

Intel’s push to expand its foundry division, which manufactures chips for external customers, continues to weigh on its finances, with the unit posting an operating loss of USD 2.5 billion in the fourth quarter. Analysts have raised concerns about the lack of clarity around customers for the next-generation 14A manufacturing process. Management has said it will not invest in dedicated factory capacity for 14A until firm customer commitments are in place. The foundry business is central to Tan’s turnaround strategy, but ongoing execution challenges have fuelled doubts about Intel’s ability to compete effectively with industry leader Taiwan Semiconductor Manufacturing Company. While Intel is dealing with yield constraints, competitors such as AMD continue to benefit from stable supply through their partnership with TSMC.

Government Stakes and Taxpayer Impact

The sharp movement in Intel’s share price also carries implications for the United States government, which became a significant shareholder under the CHIPS and Science Act. In August 2025, the government converted USD 8.9 billion in grants into a 10 per cent equity stake in the company. Despite the recent sell-off, taxpayers still hold a paper gain, with the government’s stake valued at approximately USD 20.4 billion based on a purchase price of USD 20.47 per share. The Trump administration has positioned Intel as a key pillar of its effort to rebuild domestic semiconductor manufacturing. However, repeated execution issues are complicating the narrative of a rapid revival of American industrial strength. Intel AI Chief Sachin Katti Joins Sam Altman-Run OpenAI To Build Compute Infrastructure for AGI Research To Scale Its Applications.

Looking Ahead to 18A and Panther Lake

Investor attention is now focused on the Panther Lake processors, the first laptops featuring these chips having gone on sale in January. Built using the advanced 18A process node, their market reception is seen as a critical indicator of Intel’s long-term recovery prospects. Although demand remains strong, according to Tan, the company must demonstrate consistent execution of its roadmap without further production setbacks. For now, the CEO has urged patience, noting that restoring a global semiconductor leader will require sustained effort over time.

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(The above story first appeared on LatestLY on Jan 25, 2026 11:00 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).