The Pains of Intel: Navigating Design Challenges, Process Tech Hurdles, Internal Struggles, and Political Pressure
By Anton Shilov, Tom’s Hardware – August 11, 2025
Intel, once a beacon of semiconductor innovation and market leadership, is currently confronting profound difficulties that span CPU design, manufacturing processes, internal discord, and external political pressures. While the roots of Intel’s problems trace back several years, the confluence of these challenges has escalated into a critical situation that threatens the company’s future profitability and position in the global chipmaking landscape.
Complex Legacy of Manufacturing and Design
Historically, Intel’s vertically integrated model—designing CPUs and manufacturing them in-house—was central to its dominance. However, the landscape has changed. Today, Intel’s manufacturing arm is a financial drain, bleeding billions each quarter, despite the company still owning $108 billion in manufacturing and real estate assets. Notably, Intel’s flagship CPUs are no longer exclusively produced internally; instead, many are fabricated at TSMC, a foundry specialist.
Intel’s fabrication plants (fabs) operate predominantly as low-mix/high-volume facilities, optimized for maximum throughput and cost efficiency for Intel’s own CPUs. These fabs rely on highly specialized process flows and proprietary electronic design automation (EDA) tools that prevent easy adaptation to external clients’ diverse requirements.
In stark contrast, companies like TSMC employ flexible, high-mix/low-volume fabs tailored to accommodate a broad customer base. These fabs sacrifice some efficiency but excel at rapid reconfiguration and handling varied products, making them the preferred choice for many fabless semiconductor developers.
Process Technology: The 18A and 14A Nodes
Under former CEO Pat Gelsinger, Intel launched ambitious plans around 20A (approximately 2nm) and 18A (approximately 1.8nm) process technologies as part of its IDM 2.0 strategy, aiming both to manufacture internal products and attract third-party foundry clients. Nevertheless, foundry interest in the 20A node evaporated, forcing Intel to cancel its deployment and outsource certain chiplet production for its Arrow Lake CPUs to TSMC.
Consequently, 18A emerged as the centerpiece of Intel’s turnaround efforts. The company plans to ramp up 18A-based compute chiplets for Panther Lake processors in late 2025 at its Arizona and Oregon fabs. Key customers include Microsoft, which has committed to leveraging this node for upcoming data center processors, and the U.S. Department of Defense, intending to use 18A for advanced aerospace and military applications. Industry giants Broadcom and Nvidia are reportedly exploring the 18A node without firm commitments.
Despite these endorsements, interest in 18A from the broader foundry market remains muted. Intel reportedly shifted focus toward an upcoming 14A (1.4nm-class) technology, with management acknowledging that 18A was never designed from the ground up as a foundry-optimized process. This contrasts with industry leaders like TSMC, whose process nodes are validated across various applications—from mobile to AI and HPC—ensuring compatibility with a wide array of third-party intellectual property (IP) and design requirements.
Intel’s 18A and 20A nodes prioritize performance for Intel’s own CPU architectures, featuring specific voltage and frequency optimizations, and limited device variant support. Broader foundry clients demand more generalized technologies adaptable to diverse semiconductor designs, making Intel’s current processes less attractive without further investment to broaden compatibility.
Strategic and Operational Challenges
The company faces difficult cost management issues amid these technical challenges. Intel must reduce expenses aggressively to aim for break-even by 2026, a task that has necessitated layoffs numbering in the tens of thousands. This cost cutting comes amid waning product competitiveness—Intel’s CPUs are perceived as lagging behind AMD and Nvidia counterparts regarding performance, while its manufacturing technologies trail TSMC’s most advanced nodes.
Additionally, Intel’s substantial manufacturing infrastructure complicates strategic pivots. Its fabs are expensive, specialized assets that cannot be easily sold or repurposed without significant financial or operational loss. The company’s internal culture and decision-making processes have also been flagged as sources of friction hampering innovation and rapid adaptation.
Political and Geopolitical Pressures
Intel’s difficulties extend beyond the purely technical and financial realms into geopolitics. Newly appointed CEO Lip-Bu Tan has become a figure embroiled in tensions between the U.S. and China, as the semiconductor sector is increasingly viewed as a strategic national security domain. Intel’s partnerships with U.S. government entities, like the Department of Defense, underscore the sensitive intersection of technology and policy.
Moreover, the U.S. government’s concerns over supply chain security and domestic chip manufacturing capacity have added pressure on Intel to invest in local production capabilities. These expectations come with both increased scrutiny and calls for billions of dollars in federal support, intensifying the corporation’s challenges in balancing market demands with political imperatives.
Conclusion: An Uncertain Future
Intel stands at a crossroads. The company’s survival is not assured, with pressing challenges involving technology catch-up, operational restructuring, and navigating a fraught geopolitical landscape. While Intel’s forthcoming advance to 18A and 14A nodes may represent technological milestones, the questions remain whether these developments can restore Intel’s competitive edge and profitability.
Evolving from a manufacturing-centric past into a flexible, market-responsive enterprise while managing internal culture shifts and external pressures is a daunting task. As one of the world’s oldest and largest chipmakers attempts to reinvent itself, the broader semiconductor industry and global technology ecosystem watch closely to see whether Intel can reclaim its footing or continue to lose ground.
For continued coverage on Intel’s developments and semiconductor industry news, stay tuned to Tom’s Hardware.
