Editor's Note: Since breaking out of a bullish trend in early April, Intel's stock price has been steadily recovering. In June, it experienced two key catalysts: first, there were reports in the market that Google had placed an AI chip order with Intel, causing a significant single-day surge in its stock price; second, Bank of America, in a rare move, upgraded Intel's rating from "Underperform" directly to "Buy," raising the target price from $96 to $135. Behind this rebound, the market is not just repricing Intel's short-term performance, but also its strategic position in AI CPUs, advanced manufacturing, and the U.S. domestic semiconductor supply chain.
Today, Intel's transformation narrative is transitioning from "self-rescue" to "re-expansion." With Pat Gelsinger taking over as CEO, a new board of directors, and strategic capital from the U.S. government, SoftBank, NVIDIA, and others, the market's expectations for Intel have markedly improved. However, this article cautions that what will ultimately determine whether Intel can return to the forefront of advanced manufacturing is not just customer commitments and stock price rebound, but whether it has enough capital to truly build out its manufacturing capacity.
The author believes that Intel's challenges over the past decade have largely stemmed from financial engineering: selling assets, bringing in joint venture partners, and using Smart Capital (reducing capital expenditure pressure through joint ventures and asset disposal) to alleviate cash flow stress, but at the cost of sacrificing the long-term benefits of core assets like fabs.
Now, what Intel should do most at this juncture is not stock buybacks, but rather equity financing while the stock price is strong. The reasons are straightforward: firstly, the current valuation is already high, and a 4% to 5% equity dilution could raise approximately $25 billion, significantly enhancing Intel's ability to build out advanced manufacturing capacity; secondly, the U.S. government, SoftBank, NVIDIA, and others all entered at prices below the current stock price, so an issuance at this time would not necessarily "punish" new shareholders, but could instead increase book value per share and provide these strategic investors with gains on paper.
More importantly, the alternative financing methods Intel has tried in the past have proven to be costly. Whether it's selling NAND, reducing its stake in Mobileye, divesting its ownership of Altera, or introducing partners like Apollo and Brookfield through SCIP (Semiconductor Common Investment Projects, i.e., exchanging long-term fab income for external capital), essentially, it is all about trading assets and future income for cash. Intel's recent $14.2 billion buyback of Apollo's stake in Fab 34 precisely illustrates that giving up fab economic interests in the past was not cheap. Increasing debt will raise pressure on the balance sheet, selling more assets is not viable, and equity has now become the cheapest and cleanest source of funding.
Therefore, the core argument of this article is: Intel is not lacking a "renaissance story" at the moment; what it truly lacks is the capital needed to realize the story. The demand for Agentic CPUs (a new type of CPU for the AI agent era), potential key customers like SpaceX and Tesla, orders from Nvidia and Google, all provide Intel with a demand foundation that can be showcased to the capital markets. For Intel, issuing more shares is not just dilution but, during a window of opportunity, a way to exchange cheap capital for advanced manufacturing capacity, foundry business, and the narrative of silicon sovereignty. Missing this window may be more costly than the financing itself.
The following is the original text (slightly revised for better readability):
We have written many articles about Intel. For us, this company holds special significance; it is almost fair to say that it is the cornerstone of the semiconductor industry. Merely stating that we love Intel and recognize its role in the world is far from enough. In the past, when Intel's early products encountered issues, we were very straightforward in pointing out the problems; and for its transformation, we have always been supportive and hopeful. One of our firmest beliefs is that the Intel board is one of the major culprits responsible for Intel's decline, and recently, we have finally seen the change we have been waiting for.
Franky Yeary has just stepped down from the board after serving for 17 years, and the new board is now composed of people who truly understand this industry, not just financial engineers. The new chairman has served at Qualcomm, with Lip-Bu Tan as CEO, Microchip's Steve Sanghi, Stacey Smith, and ASML's Eric Meurice all on the board. In other words, this board finally truly understands the technology.
However, despite Intel's transformation being partly underway, there is still a long way to go to fully revitalize the company. Today, we believe that Intel should take another major strategic gamble under this new board: not a stock buyback, but issuing enough new shares to thoroughly repair Intel's financial situation at once.
Lip-Bu Tan has already pulled Intel back from the cliff edge and raised approximately $20 billion through investments from the U.S. government, SoftBank, Altera, and Nvidia. Intel should not stop halfway but should continue to take advantage of the current strong share price. During those bad years, the company was a significant net buyer of shares; now is the time to issue equity while the stock price is strong. If done right, this will make Intel's transformation easier to succeed.
The Current Equity Dilution Actually Rewards Early Investors
Take a look at the initial investment prices. The U.S. government subscribed to a maximum of 433 million shares at $20.47 per share, representing a 9.9% ownership stake at the time of signing; by the end of the first quarter, 149 million shares were still in custody. SoftBank's share price was $23.00, and NVIDIA's share price was $23.28. Today, all these shareholders are already in a profitable position.
Therefore, the intuition that fundraising would punish newly entered investors is actually misguided. Issuing shares at a price far higher than these entry prices today will increase the book value per share and also allow the U.S. government, SoftBank, and NVIDIA to realize book gains. The close to 10% sovereign capital anchoring is itself a key reason why Intel was able to complete a large-scale issuance at a low cost. Intel is one of the very few global companies that can sell stocks in large quantities in a hot market sentiment while having the backing of the U.S. government. As long as this leverage exists, it is worth utilizing.
Intel Needs Capital to Execute Transformation
Based on performance in the past 12 months, Intel is almost as expensive now as it has been since the 2000 bubble. We believe in the bright future of the company, but one of the most critical elements to achieve this future is capital; and the current stock price does not fully reflect the true execution risks.
More importantly, even in the most optimistic scenario where demand for Agentic CPUs (a new type of CPU for the AI agent era) rebounds and everything goes perfectly, Intel cannot bear all the investment required for all upside scenarios alone. We believe that now is the time for Intel to conduct a "reverse buyback": take advantage of the current market demand for stock issuance and raise equity financing.
Equity is Currently the Cheapest Source of Funding Intel Can Access
Opponents may argue that Intel has other ways to finance its fabs. However, it has tried those methods and has just shown through its actions that those methods are not effective.
Apollo once invested $11.2 billion for a 49% stake in the Fab 34 joint venture project; Brookfield designed a financing structure for the Arizona fab project; Silver Lake acquired a 51% stake in Altera for $87.5 billion in enterprise value, bringing Intel approximately $4.3 billion in net cash. Intel also sold its NAND business to SK Hynix in stages and continued to sell Mobileye shares. "Smart Capital" (a capital strategy that reduces capital expenditure pressure through joint ventures, asset sales, etc.) was once Intel's core narrative.
Then, on March 31, 2026, Intel agreed to repurchase Apollo's 49% stake in Fab 34 and completed the transaction on April 8 for a total price of $14.2 billion, with approximately $7.7 billion in cash and an additional $6.5 billion in bridge loans. Management described this buyback as earnings accretive, and they are correct, as this is the key. If acquiring chip fab ownership is accretive, then selling the fab's economic interest to a partner in the first place was essentially a form of expensive financing. The SCIP (Semiconductor Common Investment Program) actually involved transferring a portion of the long-term income rights of the company's most valuable asset to external investors in exchange for funds that, while appearing cheaper on the surface, were actually costlier. Intel has now proven with its checkbook that it is more willing to hold the fab itself and take on the corresponding debt rather than continue to cede fab income.
So, cross off the other options. Continuing more SCIP is precisely the kind of option that management just spent $14.2 billion reversing. Taking on more debt would stack on top of the existing $45 billion debt on the balance sheet; with the Apollo bridge loan included, the debt level would reach around $51.5 billion. Major asset sales have also essentially been completed, with either Mobileye or Altera sold or their stakes divested. That leaves equity financing. And at the current valuation levels, equity is the cheapest capital Intel has in hand.
With the announcement of the large-scale Terafab project and the spillover demand from the severe N3 shortage, Intel's foundry business is just getting started. To truly seize this unique window, Intel must become a key supplier to the entire industry in times of advanced process chip shortages. The amount of funding needed for this significant bet is far beyond what Intel can afford solely relying on operating cash flow.
A mere 4% to 5% dilution in equity can raise approximately $25 billion, which is enough to turn the most optimistic supply capacity narrative into a reality at this critical moment.
Agentic CPU Demand Still Insufficient to Foot the Terafab Bill
The commitments from major clients represented by SpaceX, Tesla, and Terafab are key to addressing the 14A production capacity issue. The initial target is to achieve a monthly wafer starts per month (WSPM) of 100,000, with further expansion to 1 million—this will be very challenging and will impose extremely heavy capital pressures. However, this step must be taken because Liwu Chen has publicly stated that if there are no customers, he will shut down the foundry business. Now that the customers are here, it's time to build.
In addition to the Terafab partnership, Intel's order book is also filling up. The NVIDIA DGX Rubin NVL8 configuration lists dual Intel Xeon 6 host CPUs; Google has signed a multi-year agreement covering Xeon and custom IPU; and SambaNova has also joined the inference business. The wafer volume behind these orders has not been fully disclosed, but the capital markets are funding a visible order book at a cost far below funding a transformation story. Intel finally has orders to show to the market. Equity financing around signed demand is entirely different in pricing logic from equity financing around a commitment.
Due to lower-than-expected CPU demand, Intel has been trying hard to delay capital expenditures in the past. But now is the time to go all-in once again, like in the Gelsinger era. This is a critical moment for silicon sovereignty, and Intel must continue to raise the stakes.
The total cost of Intel's comprehensive multi-stage project could reach as high as $119 billion. While SpaceX will provide initial capital, Intel must also make a meaningful contribution. Even just marginal capital support implies a need for hundreds of billions of dollars in additional funding, which a month ago was not even in Intel's capital expenditure decision matrix.
Now is the time to end the financial engineering of the past decade and issue shares immediately. Because although capacity ramp-up is exciting, it will be very expensive. The current equity issuance window is the widest it has been in a while; if Cerebras can raise $5.55 billion, Intel could raise $25 billion. This view will only be stronger as Intel's market value of around $498 billion can fully support a much larger subsequent issuance. In our view, this window seems to be wide open. Below are some data points from recent other issuance cases.
In other words, Intel's real problem now is no longer "whether there is a story" but "whether there is enough capital to turn the story into capacity." With strategic capital from the U.S. government, SoftBank, NVIDIA, and others already in the game, and advanced process supply in a tight window, equity financing is no longer just a defensive move to dilute shareholders but may become Intel's offensive choice to restart its foundry ambitions and bet on silicon sovereignty. For Intel, missing this financing window may be more expensive than the dilution itself.
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