Intel case study Aug 2025

Economist article 

The article details the decline of Intel and uses it as a case study to argue for a nuanced, pro-globalization approach to U.S. semiconductor policy.

1. Intel's Dramatic Fall from Dominance:

· Once a dominant leader in chipmaking, Intel has fallen behind, now ranking outside the top 15 most valuable chip firms.

· It missed crucial technological shifts (smartphone and AI waves), losing out to competitors like Arm, Nvidia, and TSMC.

· The company is now struggling financially: heavily indebted, with falling sales, and delayed projects (e.g., an Ohio fab pushed to the 2030s).

· Even with massive government subsidies from the CHIPS Act ($8bn grants, $12bn loans), Intel is floundering and may need over $50bn more with no guarantee of success.

2. Critiques of U.S. Industrial Policy and Proposed "Rescues":

· Biden's CHIPS Act: While well-intentioned, it has so far failed to turn Intel around.

· Trump's Proposed Policies: The article is highly critical of his approach, arguing that tariffs on chip imports, browbeating companies to use Intel, and quasi-nationalization (taking a government stake) would be "self-defeating." They would raise costs, hurt customers, create uncertainty, and complicate matters without solving the core problems.

· The article argues the government should not "throw good money after bad" into Intel and should instead consider alternatives like selling Intel's fabrication business or its design arm.

3. The Realistic Path Forward for U.S. Chip Resilience:

· Look Beyond Intel: The solution isn't to save one company. Encourage other leading chipmakers like TSMC and Samsung, who are already building fabs in the U.S., by solving their problems (e.g., speeding up permits, addressing skilled worker shortages).

· Acknowledge Global Interdependence: The supply chain is irreducibly global, relying on key inputs from allies (e.g., lithography machines from the Netherlands, tools from Japan). Autarky is an "impossible" task.

· Taiwan Remains Critical: Even with U.S. fabs, Taiwan will still produce the majority of the world's most advanced chips for the foreseeable future. Its security is paramount to global chip supplies. The article criticizes Trump's "cavalier" attitude toward Taiwan.

· A "Sensible" Strategy: This would involve easing permitting rules, creating worker training incentives, welcoming foreign chip plants and machinery, and ensuring policy continuity between administrations.

· See Allies as Assets: Progress by chipmakers in allied countries like South Korea (Samsung) and Japan (Rapidus) should be viewed as a contribution to U.S. security, not as competition.

Core Argument: The chip industry is a marvel of globalized specialization. Effective U.S. policy must work with this global reality to build resilience, rather than attempting a counterproductive and isolationist retreat that is doomed to fail.