Semiconductor giant Intel (INTC) is facing a severe leadership crisis as President Trump demands the immediate resignation of CEO Lip-Bu Tan, triggering a 3% decline in the company's stock price on Thursday. The controversy centers around Tan's extensive Chinese business connections, including investments of at least $200 million in hundreds of Chinese firms between 2012-2024, with some allegedly linked to China's military apparatus. 

Senator Tom Cotton has escalated concerns by questioning Tan's previous role at Cadence Design Systems (CDNS), which recently admitted to illegally selling products to a Chinese military university. The situation is further complicated by Intel's role as a recipient of $8 billion in CHIPS Act funding, adding another layer of scrutiny to the ongoing leadership crisis and strategic decisions.

Is There an Internal Rift at Intel?

Now, the Wall Street Journal reports that Trump isn’t the only one with concerns about Intel’s CEO. “Tan and some Intel directors have disagreed in his first months in the role about questions as central as whether the company should stay in the manufacturing business or exit it entirely, according to people familiar with the matter,” according to the newspaper, which also claims the board has stalled Tan’s efforts to raise capital and move on artificial intelligence (AI) M&A.

In a statement to the Journal, Intel’s board said it is “aligned” with management on company strategy, and INTC is ticking higher today in premarket trading. However, the leadership turmoil comes at a particularly challenging time for Intel, as the company grapples with significant operational and competitive pressures. 

What’s Weighing on INTC Stock?

In particular, manufacturing challenges are a drag on Intel, particularly with the crucial 18A chip process showing disappointing yield rates. At the same time, the strategic shift to the 14A chipmaking process under Tan's leadership could result in substantial writedowns. 

The company's foundry division continues to underperform, generating minimal external revenue despite major investments, and Intel's position in the AI chip market remains notably weak compared to dominant competitor Nvidia (NVDA).

Financial indicators paint a concerning picture, with Intel reporting a $2.9 billion loss in the second quarter alongside revenue of $12.9 billion, including restructuring charges from a 15% workforce reduction. The company's credit rating has been downgraded to BBB by Fitch, reflecting ongoing demand weakness and competitive pressures. 

What’s Next for Intel?

Intel stands to potentially benefit from Trump's new semiconductor tariff policy, which exempts U.S. manufacturers, but the company's market value has fallen below $100 billion as it struggles to maintain its position in traditional computing markets against rivals like Advanced Micro Devices (AMD).

INTC stock is trading near the low end of its year-old trading range between $19 and $25. Analysts tracking the shares aren’t expecting an explosive move out of this channel anytime soon, with a consensus “Hold” rating and an average price target of $23.02.

Meanwhile, Intel options traders are taking a put-heavy approach in the weekly series expiring Aug. 29, where the put/call open interest ratio has ballooned to 2.03. Most of the put open interest in that series is stacked up at the 17.50 strike, with 44,384 contracts outstanding - but with a delta of -0.12, these Intel put options currently have a very low probability of finishing in the money. These puts were recently added, so they may have been purchased cheap as potential crash protection, or sold to open as part of an income strategy.

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