Barron's Daily
Barron's Daily
March 13, 2025

Trump’s Chips War Has Left Intel’s New CEO With a Near-Impossible Task. Here’s Why and 5 Other Things to Know Today.

It’s possibly the hardest job in corporate America and Lip-Bu Tan is likely the best appointment. But it might be too much to ask Intel’s new CEO to restore an icon of U.S. high-tech manufacturing to its former glory.

Reviving Intel’s chip-fabricating operations is the most difficult part of Tan’s job, and one that chimes with the Trump administration’s bid to revive American manufacturing. Secure supply chains are key to that goal and ensuring them for semiconductors is arguably the most important pillar—beyond even steel or cars.

However, President Donald Trump might make Tan’s job even harder as he campaigns for a stop to the Chips Act—which is set to grant up to $8.5 billion in direct funding to Intel as a big incentive to set up new factories across the U.S. Instead, the president hopes to achieve similar goals via the threat of tariffs, which he claims encouraged Taiwan Semiconductor Manufacturing—the company that replaced Intel as the world’s leading maker of advanced chips—to commit $100 billion of investment in the U.S. Reports suggest the administration might not be averse to the Taiwanese company also taking over Intel’s chip-making facilities.

Judging by his letter to Intel employees, Tan intends to maintain the company in its present form rather than spinning off the chip-manufacturing operations. The new CEO has more than 20 years of semiconductor and software experience, an engineering background, and a track record of leading a turnaround at Cadence Design Systems. But that might not be enough for Intel to take on Taiwan Semiconductor on its home turf, while also catching up to rivals such as Nvidia in the field of artificial-intelligence chips.

Tan will be under pressure to convince both the market and politicians that he has the solution to Intel’s problems. But it’s possible that’s a job beyond any chief executive, no matter how gifted.

Adam Clark

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Lip-Bu Tan Faces Big Challenges at Chip Maker

Intel is bringing back former board member Lip-Bu Tan in a new role, as the chip maker’s CEO. His task is a challenging one. Tan, who assumes the job next week, will have to restore Intel to its former status as a chip powerhouse and stabilize a business that is struggling to keep pace with rivals.

  • His return (he left Intel’s board last August after a dispute over the company’s direction) also comes as Intel is in the middle of a costly attempt to boost its foundry business. The company reportedly has been in talks with various suitors or partners who could get involved in various areas of its business.
  • Tan is formerly the CEO of Cadence Design Systems, a company that makes tools to design chips that he helped turn around. Intel cited Tan’s deep relationships across the product and foundry sectors and his proven track record of creating shareholder value.
  • He takes over from interim CEOs David Zinsner and Michelle Johnston Holthaus, who were installed temporarily after former CEO Pat Gelsinger’s resignation in December. Zinsner and Johnston Holthaus will remain in their previous roles with the company.
  • Intel was a leader in the American chip industry for decades until recently, when some manufacturing missteps and a shift toward artificial intelligence drew demand to rivals. Nvidia, the leader in AI chips, has a $2.8 trillion market value, while Intel’s is about $89 billion.

What’s Next: Intel executives have contemplated potential deals with other chip companies, including a separate board for its manufacturing operations, and among the options explored is a break up of the company, The Wall Street Journal reported.

Adam Levine and Liz Moyer

Cooler February Inflation Doesn’t Mean Fed Will Lower Rates

A cooler-than-expected inflation reading is unlikely to sway the Federal Reserve to lower interest rates next week or in May. Analysts who had braced for higher readings were relieved that labor conditions and overall economic growth remain stable, even if inflation remains above the central bank’s 2% target.

  • The consumer price index rose by 2.8% in February from a year earlier, while core CPI excluding food and energy costs ticked up 3.1%. Both were the first deceleration in inflation since September.
  • The probability of at least one quarter-point rate cut through the Fed’s May meeting fell to 30.5%, while the odds of no cuts through June rose to 19.9%. Neil Dutta, Renaissance Macro Research’s head of economic research, said CPI won’t “meaningfully change the dial for the Fed.”
  • The price of goods rose 0.2% from January, partly because of President Donald Trump’s 10% tariffs on Chinese imports. But Pantheon Macroeconomics’ chief U.S. economist Sam Tombs said half that increase was because clothing prices rebounded after January’s severe winter weather kept consumers from shopping.
  • In other categories, new vehicle prices dropped 0.1% from the month before, while the prices for used cars and trucks rose 0.9%. While grocery prices overall were flat, however, egg prices jumped 10.4% for the month, and analysts expect them to stay elevated in the near term.

What’s Next: Underlying disinflation not only helps offset the effects of the Trump administration’s tariffs on a variety of imported goods, it gives Fed officials some flexibility to cut rates should labor conditions or economic growth start to weaken. The Fed releases its next rate decision on March 19.

—Megan Leonhardt and Janet H. Cho

With Shutdown Deadline Looming, Democrats Won’t Budge on Bill

Senate Democrats are backing a one-month extension to government funding as time to avert a government shutdown is rapidly coming to an end. Minority Leader Chuck Schumer said Wednesday his GOP colleagues don’t have the votes to successfully pass the House funding bill.

  • Both sides are accusing the other of bringing Americans to the brink of another damaging shutdown. Schumer is blaming Republicans for not getting input from congressional Democrats on the package. Republicans are prepared to blame Democrats for blocking the deal. There is currently only one option on the table.
  • Senate Democrats have a dilemma. This standoff is their way to push back at the Trump administration’s GOP allies and Elon Musk’s sweeping cuts to the government. But a shutdown, including the furlough of civilian workers, could also embolden the administration’s efforts to shrink the federal workforce.
  • The Education Department is cutting half its staff under a plan to eliminate it entirely, while the Veteran’s Affairs Department is slashing 70,000 workers. The House bill extends funding through Sept. 30, with a $6 billion increase in military spending and $13 billion in cuts for nondefense spending.
  • The gap between federal revenue and government spending widened to more than $1 trillion in the first five months of the fiscal year, which starts in October, driven by spending on interest, military programs, public benefits, and security, the Treasury Department said.

What’s Next: Congress has to get a funding extension passed and on President Donald Trump’s desk by the end of Friday. And that isn’t all the government faces. Canada and the European Union announced a set of retaliatory tariffs on American imports