Intel CEO Lip-Bu Tan's Successor Patrick Gelsinger Fails to Impress Cramer

Intel Corporation (INTC) shares sank 8.5% after warning of potential write-offs and a possible halt in developing its next-generation 14A chip technology. CNBC's Jim Cramer expressed concerns about the company's balance sheet, stating he "doesn't know if it's sustainable." Cramer criticized Intel's CEO, Patrick Gelsinger, for his management and use of government funds.

Intel Corporation (INTC) shares sank 8.5% after the company warned of potential write-offs and a possible halt in developing its next-generation 14A chip technology. CNBC's Jim Cramer expressed concerns about the company's balance sheet, stating he "doesn't know if it's sustainable." Cramer criticized Intel's CEO, Patrick Gelsinger, for his management and use of government funds.

Intel's latest financial report revealed significant challenges. The company posted a staggering $18.8 billion loss in its foundry division in 2024, despite receiving $8.5 billion in U.S. CHIPS Act subsidies [1]. This financial setback has raised questions about the sustainability of domestic semiconductor manufacturing in the face of global competition.

Cramer questioned whether producing chips in the U.S. is sustainable, citing Intel's substantial losses despite government subsidies. He stated, "You want to build semis here? We sell your stock."

Intel's financial woes have been further compounded by intense competition from rivals like Advanced Micro Devices (AMD) and Qualcomm Inc. (QCOM). Fitch Ratings downgraded Intel's long-term credit rating from BBB+ to BBB, citing the company's ongoing struggle to maintain demand for its semiconductor products [1].

The company's latest earnings report showed that it posted second-quarter revenue of $12.86 billion, surpassing analyst expectations of $11.91 billion. However, the company reported an adjusted loss of 10 cents per share for the quarter, falling short of analysts' forecast of a one-cent profit. The revenue for the foundry division was $4.4 billion, up 3% year-over-year [1].

Cramer's criticism of Gelsinger and the use of government funds comes at a time when Intel is facing significant challenges in its Ohio project. The company has struggled to meet commitments and has faced delays in its massive construction project outside Columbus. The project has been badly delayed, and the chipmaker said this year that the factories would not be operational until at least 2030 [1].

The stakes are high for Intel and Ohio. Semiconductor chips are used in everything from cellphones to fighter jets, and both presidents viewed domestic production as critical to national security. The Ohio project was seen as a key part of this strategy, but the delays and financial setbacks have raised questions about its viability.

Intel's situation is indicative of the struggles the Trump administration will face as it tries to shift the bulk of semiconductor production to the United States from Asia. While the Biden administration offered financial incentives through the CHIPS Act, forcing this transition could prove extraordinarily difficult, as the delays around the Ohio project demonstrate [1].

References:
[1] https://www.straitstimes.com/world/united-states/trump-attack-on-intels-ceo-tan-could-compound-factory-struggles
[2] https://finance.yahoo.com/news/jim-cramer-calls-intels-18-233133342.html