"Intel’s Biggest Problem Remains Untouched by Nvidia’s $5 Billion Deal"
Updated on September 19, 2025, at 2:32 PM · Reading time: 3 minutes
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"Intel still faces major challenges despite Nvidia’s $5 billion investment."
Nvidia’s (NVDA) $5 billion investment in Intel (INTC) sent Intel shares surging as much as 30% on Thursday, drawing cheers from investors. Yet the move does little to address Intel’s biggest challenge: reviving its struggling contract chipmaking division.
Under the agreement, which grants Nvidia a 4% stake in Intel, Nvidia will incorporate Intel’s CPUs (central processing units) into its AI data center servers, while Intel will integrate Nvidia’s AI technology into its semiconductors for personal computers.
"Importantly, the agreement made no reference to Intel's manufacturing division, Intel Foundry Services, the part of the company that has attracted significant scrutiny from investors and the U.S. government while grappling with substantial losses amid the AI-driven shift in the chip market."
H1: Intel-Nvidia Deal Sidesteps Intel Foundry Services Amid AI Market Shifts
Importantly, the agreement made no mention of Intel's manufacturing division, Intel Foundry Services—the segment facing intense scrutiny from investors and the U.S. government while struggling with heavy losses as AI reshapes the chip market.
Intel Foundry Services Faces Massive Losses and Uncertain Future
Gelsinger's Ambitions Falter Amid Lack of Customer Commitments
Intel CEO Pat Gelsinger's high hopes for the foundry business largely fell short, as major customer deals failed to materialize. Intel Foundry Services’ losses surged to $13 billion in fiscal 2024, up from $7 billion in 2023, contributing to a 60% drop in Intel’s stock last year. Gelsinger was subsequently removed by the board in December.
Wall Street Analysts Concerned About the Foundry Business
Analysts say Intel’s foundry operations remain the company's biggest worry. Some suggest selling the division, while others caution that divestment could increase chip production costs due to lost economies of scale.
"This is a business that will continue to bleed cash at least through 2027," CFRA analyst Angelo Zino told Yahoo Finance.
Intel and Nvidia Explore Short-Term Chip Production Options
At a press conference discussing Thursday’s deal, Intel and Nvidia CEOs hinted that Nvidia could eventually become a customer of Intel Foundry Services. In the near term, however, the companies plan to partner with Intel rival TSMC to manufacture newly designed chips.
National Security and U.S. Interests
The U.S. has a vested interest in Intel’s manufacturing success. Intel remains the only large-scale, leading-edge chipmaker in the U.S., supplying advanced chips to the Department of Defense. By contrast, most of the world’s most advanced chips are produced by Taiwan’s TSMC.
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