Concerns about the financial situation of Intel, one of the largest chip manufacturers in the USA, are followed carefully in Washington. According to reports, if Intel’s financial situation continues to deteriorate, US lawmakers will consider options to provide support to the company. This potential aid package would go beyond the scope of the CHIPS Act, which Intel was previously announced to benefit from and is expected to receive at least $8.5 billion by the end of 2024.What is “Too big to fail”?
The phrase “too big to fail” or “too big to fail” is a term heard especially by those familiar with the fields of finance and economics. This statement means that some large companies or financial institutions cannot be allowed to fail because they are so important and large.
The collapse of such institutions is supported by bailout interventions by governments or central banks, as it would have major negative effects on the economy. For example, this policy was adopted for some large banks during the 2008 global financial crisis. It seems that these interventions will be implemented when necessary for Intel, which is going through the worst period in its history.
save intel
While US lawmakers are quietly discussing measures to prevent Intel from going bankrupt, it should be noted that these are being carried out only as precautionary measures. Although Intel announced a large loss in its 2024 third quarter earnings call, its revenues were above expectations. Intel is currently undergoing one of the most important restructuring processes since its founding in 1968.
Intel’s strategic importance for the USA stands out as the main reason behind these discussions. While the USA is struggling with China for global leadership in the field of advanced technology, Intel’s being the only American company that does both chip design and production provides a great advantage. Other US-based semiconductor giants such as AMD and Nvidia only design chips; Production is outsourced to other companies.If Intel fails, the United States will become dependent on foreign companies like Taiwan’s TSMC and South Korea’s Samsung to produce its most advanced chips. Although these two companies have production facilities in the USA, the total production capacity of these facilities is quite limited. In addition, Taiwan and South Korea, where TSMC and Samsung are headquartered, pose strategic risks due to their proximity to China.
Another important reason why Intel’s bankruptcy is undesirable is the company’s contribution to the US economy. Intel, which is among the country’s largest exporters with export revenue exceeding 40 billion dollars in 2023, produces high-tech chips for the army through the Secure Enclave program of the US Department of Defense. Intel, which also plays an important role in terms of workforce, still employs more than 120,000 people, although it has recently laid off more than 16,000 employees.
In addition to all this, policymakers are hesitant about the cash aid the White House provided for Chrysler and General Motors in 2008. Instead, it is stated that the government can encourage private sector mergers. After all, there are some rumors that Arm and Qualcomm are interested in buying some or all of Intel, but some experts say breaking up Intel wouldn’t help anyone.
It is unknown how Intel’s situation will be shaped in the future; however, the company continues to move forward with the 18A production process. Although the company has not yet signed very large production agreements, the company announced that Amazon and two other companies have committed to using this technology for their next generation semiconductors.
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