Geopolitical Risk Mitigation in the Semiconductor Sector: Intel's Strategic Resilience Amid U.S.-China Tensions

The U.S.-China tech rivalry has reshaped the semiconductor industry into a battleground of geopolitical strategy, with companies like Intel at the center of a high-stakes game of resilience and adaptation. As the Trump administration intensifies its focus on supply chain security and national defense, investors must evaluate how firms navigate these pressures. Intel, a once-dominant chipmaker now repositioning itself in a fragmented market, offers a compelling case study in mitigating geopolitical risk through strategic alignment with U.S. industrial policy.

The CHIPS Act and the Reshoring Imperative

The CHIPS and Science Act of 2022, which allocated $50 billion to bolster domestic semiconductor production, has been a lifeline for Intel. The company secured nearly $8 billion in subsidies to expand manufacturing in Arizona, Ohio, and New Mexico, positioning itself as a key player in the U.S. government's push to reduce reliance on foreign supply chains. This funding is not merely financial support—it is a strategic investment in national security, reflecting the administration's view of semiconductors as critical infrastructure.

However, Intel's participation in this initiative has come with significant governance challenges. The controversy surrounding CEO Lip-Bu Tan, whose past investments in Chinese semiconductor firms and tenure at Cadence Design Systems (a company previously penalized for export violations) drew scrutiny, underscores the heightened political stakes. Trump's direct demand for Tan's resignation in 2025 highlighted how corporate leadership in the semiconductor sector is now subject to real-time geopolitical judgment. For investors, this signals that governance transparency and alignment with U.S. policy are no longer optional—they are existential requirements.

Financial Realities and Strategic Adjustments

Intel's financial performance in 2025 reflects the dual pressures of geopolitical risk and market volatility. Second-quarter revenue of $12.9 billion remained flat year-over-year, despite a $1.9 billion restructuring charge tied to workforce reductions and operational overhauls. The company's gross margin dropped to 27.5% from 35.4% in Q2 2024, a decline attributed to slowing construction in Ohio and abandoned projects in Germany and Poland. These adjustments, while painful, demonstrate Intel's prioritization of capital efficiency in an uncertain environment.

The company's decision to monetize non-core assets, such as its stake in Mobileye, has bolstered liquidity, adding $922 million to its balance sheet in July 2025. This move aligns with a broader trend in the sector: firms are shedding peripheral holdings to focus on core competencies and reduce exposure to geopolitical shocks. Intel's 2025 operating expenses are projected at $17 billion, a figure that balances R&D investments in AI-focused CPUs like the Xeon 6776P with the need to maintain fiscal discipline.

Competing in a Fractured Landscape

Intel's challenges are not unique, but its strategic choices highlight the sector's evolving dynamics. Competitors like TSMC and NVIDIA have leveraged geopolitical neutrality and software-driven ecosystems to mitigate risks. TSMC, for instance, has secured U.S. tariff exemptions while expanding domestic manufacturing, while NVIDIA's AI hardware leadership has insulated it from some of the sector's volatility.

Intel's 18A manufacturing process and Panther Lake roadmap aim to close the gap with these rivals, but the path is fraught. The Trump administration's 100% tariff threat on imported chips has forced Intel to weigh the costs of reshoring against operational efficiency. For now, the company is hedging: advancing domestic production while maintaining a global supply chain. This duality is both a strength and a vulnerability.

Investment Considerations: Risk vs. Resilience

For investors, Intel's story is a microcosm of the semiconductor sector's geopolitical exposure. The company's alignment with U.S. policy—through CHIPS Act funding and AI-focused R&D—positions it to benefit from long-term industrial policy tailwinds. However, its financial struggles and governance controversies highlight the risks of overreliance on government support.

A key question for investors is whether Intel can sustain its R&D momentum while navigating regulatory scrutiny. The National Defense Authorization Act (NDAA) of 2025, with its stricter supply chain reviews, will test the company's ability to balance innovation with compliance. Intel's involvement in the Secure Enclave program and its pursuit of AI-driven growth suggest it is adapting, but execution remains critical.

Conclusion: A Calculated Bet on Resilience

The U.S.-China tech rivalry has transformed semiconductors into a geopolitical asset, and Intel's journey reflects the sector's new reality. While the company faces near-term headwinds, its strategic positioning—reshoring production, securing government funding, and pivoting to AI—offers a blueprint for mitigating geopolitical risk. For investors willing to tolerate volatility, Intel represents a high-conviction bet on a sector where resilience is the ultimate competitive advantage.

In a world where corporate strategy is increasingly dictated by geopolitics, Intel's ability to align with U.S. priorities while innovating in critical technologies like AI will determine its long-term success. For now, the company's path is a reminder that in the semiconductor sector, survival is not just about technical excellence—it's about navigating the political currents that shape the industry.