Intel Stock Falls After Trump Calls Upon Its CEO To Resign Immediately

US President Donald Trump has publicly called for the immediate resignation of Intel CEO Lip-Bu Tan. The demand was posted on the President’s social media platform Truth Social, where he stated that Tan is “highly CONFLICTED” and that there is “no other solution to this problem.”

Trump’s comments come shortly after reports said that he is pushing Taiwan Semiconductor Manufacturing Company (TSMC) to acquire a 49% stake in Intel.

Also, this extraordinary intervention into a private company’s leadership was preceded by a letter sent by Senator Tom Cotton to Intel’s chairman. Cotton’s letter expressed serious concerns over Tan’s extensive business ties to Chinese firms, with some allegedly having links to the Chinese People’s Liberation Army (PLA).

Intel Was the Largest Recipient of Grants Under the Chips Act

Referring to the nearly $8 billion grant that Intel received from the CHIPS Act, the largest for any company, Cotton said, “Intel is required to be a responsible steward of American taxpayer dollars and to comply with applicable security regulations.” He added, “Mr. Tan’s associations raise questions about Intel’s ability to fulfill these obligations.”

Notably, in April, Reuters reported exclusively that Tan invested more than $200 million in hundreds of Chinese advanced manufacturing and chip firms, some of which were linked to the PLA. Tan either made the investments individually or channeled them through venture funds he founded or operated.

Intel Shares Fall After Trump Says Tan Should Resign

Tan, a veteran of the semiconductor industry, was appointed as Intel’s CEO in March, a few months after the previous CEO Pat Gelsinger abruptly resigned. Tan’s past role as the head of Cadence Design Systems, a company that recently pleaded guilty to selling products to a Chinese military university in violation of US export controls, has also been a point of scrutiny. The President’s post, which came shortly after the public became aware of Senator Cotton’s letter, has dampened market sentiments with Intel shares down nearly 3.5% even though the broader markets are in the green.

While Intel did not respond to media requests for a comment on Trump’s comments, it said, “Intel and Tan are deeply committed to the national security of the U.S. and the integrity of our role in the U.S. defense ecosystem.”

How Analysts Reacted to Trump’s Demands?

It’s quite unusual for a US president to call for the resignation of the CEO of a company, and analysts believe it does not set the right precedent.

According to Phil Blancato, CEO of Ladenburg Thalmann Asset Management, “It would be setting a very unfortunate precedent. You don’t want American presidents dictating who runs companies, but certainly his opinion has merit and weight.”

Tan has Been Trying to turn around Intel

Intel is currently undergoing a significant corporate restructuring strategy that includes global layoffs to streamline operations, cut costs, and boost efficiency. This effort is aimed at making the company leaner and more competitive in the fast-changing semiconductor market. The measures have generally been received positively by the markets as they are seen as a necessary step for Intel to regain its footing.

Tan is working on a long-term plan to turn around Intel and outlined the strategy during the Q1 2025 earnings call. Firstly, he said that the company will focus on product development, stressing “best products always win.”

Secondly, he said that Intel will “refine” its AI strategy. “Our goal will be to take our integrated system and platform view to develop full-stack AI solutions that enable more accuracy, power efficiency, and security for our enterprise customers,” said Tan during the earnings call.

Thirdly, he talked about “building trust with foundry customers.” Gelsinger had big plans for Intel’s foundry business, but that segment has sagged and has been saddled with billions of dollars in losses.

Finally, he said that Intel will strengthen its balance sheet. He, however, said that the company has decided not to “spin off Intel Capital, but to work with the team to monetize our existing portfolio while being more selective on new investments that support the strategy.”

Intel Lost Out to Competition

Intel, which was once the world’s biggest chipmaker, is now a pale shadow of its glorious past.

A lot went wrong with INTC over the last two decades. It made the strategic blunder of turning down the offer to supply processors for the Apple iPhone. The company believed that Apple might not be able to sell enough of these, and it was a tiny market to bet on.

Intel was quite slow with innovation, and AMD gradually took its market share in the PC market. Apple, too, stopped using Intel chips for its Mac and instead pivoted to its own chips.

Intel was pivoting to the foundry model and hoped to make chips for other chip designers. However, despite burning billions of dollars on that business, Intel hasn’t been able to secure enough clients for its foundries.

Credit Rating Agencies Downgrade Intel’s Ratings

The burgeoning losses in the foundry business have weakened Intel’s balance sheet, which had over $44 billion in debt at the end of Q2. Credit rating agencies have also taken note of the company’s woes, and recently, Fitch downgraded Intel’s credit rating by one notch while assigning a negative outlook on the chipmaker.

It joins credit rating peers S&P Global and Moody’s, which have previously downgraded the Santa Clara, California-headquartered company’s credit rating.

The ratings and Outlook reflect a more challenging demand environment than previously anticipated, which is constraining profitability growth,” said Fitch in its note.

It added, “Credit metrics remain weak and will require both stronger end markets and successful product ramps, along with net debt reduction over the next 12-24 months, to return EBITDA leverage to levels consistent with the ratings.”

Wall Street analysts have also been bearish on Intel stock and most rate it as a hold.