INTEL CORP

Current report

If we are unable to secure a significant external foundry customer for Intel 14A, our next generation semiconductor manufacturing process technology, we may pause or discontinue our pursuit of next generation leading-edge process technologies, which may have significant strategic business, financial, operational and reputational risks and repercussions.

Current report

As an integrated design manufacturer (IDM) with a products business that depends on access to leading-edge semiconductor manufacturing process technologies, or nodes, to produce competitive products, we have historically invested significant capital resources to continually develop new generations of leading-edge nodes and foundry capacity to produce such nodes. However, the design, development, and manufacturing of leading-edge nodes is risky and capital-intensive, and it takes years for capital investments to yield a return. If we are unable to secure a significant external customer for our Intel 14A node, we may pause or discontinue development of Intel 14A and subsequent next generation leading-edge nodes. While we remain focused on continued development of Intel 14A and securing such a significant external customer, we have taken steps to reduce our overall investment and have further slowed down the construction of the new leading-edge fabrication facilities we are building in Ohio. In addition, while we continue to evaluate Intel 14A for use in future Intel products and our plan includes an initial product designed to utilize Intel 14A, at present we are maintaining the option to design future Intel products requiring nodes with performance beyond Intel 18A and Intel 18A-P to be produced internally or by an external foundry. We have been unsuccessful to date in securing any significant external foundry customers for any of our nodes and our prospects for securing a significant external foundry customer for Intel 14A are uncertain.

Current report

If we were to pause or discontinue the design, development, and manufacturing of Intel 14A and other next generation leading-edge nodes, we would be subject to a number of significant strategic business, financial, operational and reputational risks and repercussions including, but not limited to:

Current report

▪Dependence on Third-Party Foundries: Our products business would, over time, become dependent on third-party foundries, particularly TSMC, as we develop products for nodes beyond Intel 18A and Intel 18A-P. We have no long-term contract with TSMC, and if we are unable to secure and maintain sufficient capacity on favorable pricing terms, we may be unable to manufacture our products in sufficient volume and at a cost that supports the continued success of our products business. Further, most of our competitors have longer and more established relationships with TSMC and other third-party foundries than we do, which may put us at a competitive disadvantage. There are few foundries capable of producing the leading-edge and near-leading-edge nodes needed for our products – currently only TSMC and Samsung. To the extent our competitors are more successful than us in securing capacity with those foundries than we are, our product roadmap, market position, and customer relationships would be materially adversely impacted.

Current report

▪Losses with respect to our Investments in R&D and Manufacturing Facilities and Equipment: We had over $100 billion of property, plant, and equipment, net on our balance sheet as of June 28, 2025, the substantial majority of which we estimate relate to our foundry business. While the significant majority of this relates to our existing and in-development nodes, including Intel 18A and Intel 18A-P, with each transition to a new node we continue to utilize some R&D and manufacturing assets from prior nodes. If we were to pause or discontinue the design, development, and manufacturing of Intel 14A and other next generation leading-edge nodes, we would expect to incur significant material impairments with respect to foundry assets that may impact our results of operations. For example, we would likely discontinue the new leading-edge fabrication facilities we are building in Ohio. We also would expect to incur additional costs and expenses as we wind down other projects and facilities and reduce headcount.

Current report

▪Loss of Eligibility for Government Incentives: In November 2024, we signed a Direct Funding Agreement with the US Department of Commerce for the award of $7.9 billion in government incentives. We have also entered into other government incentive arrangements with local, regional, and national governments, both US and non-US. If we were to pause or discontinue the design, development, and manufacturing of Intel 14A, we may lose eligibility for various incentives contemplated by these arrangements, and we may be required to repay amounts already received under these arrangements.

Current report

▪Potential Penalty Payments Under our SCIP Agreements: To support our capital investments in recent years, we pursued alternative financing arrangements including our 2022 joint investment with Brookfield in the manufacturing expansion of our Arizona campus and our 2024 joint investment with Apollo related to Fab 34 in Ireland. Our potential pause or discontinuation of the design, development, and manufacture of Intel 14A may accelerate our move to third-party foundry services for our products and result in our inability to satisfy construction and/or wafer demand and purchase commitments in those arrangements, potentially requiring substantial additional payments to our SCIP partners.

Current report

▪Loss of Talent: Historically, as one of the only companies in the world, and the only company in the U.S., pursuing the design, development and manufacturing of next generation leading-edge nodes, we have benefitted from being in a unique position as an employer to hire and retain scientists, engineers, and other technical talent interested in being on the cutting edge of semiconductor innovation. If we were to pause or discontinue leading-edge node design, development, and manufacturing, or any perception that we may do so in the future, may materially adversely impact our ability to hire and retain key talent across our foundry organization and the company more broadly, and we risk substantial loss of historical, technical, and other expertise.

Current report

▪Limited External Foundry Potential: We have been unsuccessful to date in attracting significant customers to our external foundry business. If we were to pause or discontinue our pursuit of Intel 14A and successor nodes, it is highly uncertain whether we would be able to develop this business. Among other things, our existing nodes (Intel 7, Intel 4 and Intel 3) were designed for Intel products, and if potential customers for our upcoming Intel 18A-P node believe we are no longer committed to continued development of next generation leading-edge nodes (Intel 14A and beyond), they may be inclined to remain with their current foundry partners and unwilling to make the significant investments of time and resources needed to develop products on our nodes.

Current report

▪Other Significant Financial, Operational, and Reputational Risks: If we pause or discontinue the design, development and manufacture of Intel 14A and future leading-edge nodes, it may give rise to additional material risks that we are not able to foresee or that are more significant than we anticipate, including, but not limited to, adverse impacts to our relationships and the terms of our engagements with customers, suppliers, and strategic partners, potential credit rating risk, and diminished investor confidence and increased stock price volatility. It is also uncertain what actions, if any, may be taken by the U.S. and other governments to the extent they view a potential discontinuation of our leading-edge process technology design, development, and manufacturing as a strategic risk from a national economic or defense perspective.

Current report

Any of the foregoing could have a material adverse impact on our revenue, operations, financial position, cash flows, access to financing, cost structure, competitiveness, reputation, profitability, and prospects and could exacerbate other risks discussed in our 2024 Form 10-K and Q1 2025 Form 10-Q. Further, given the decades of significant continuous investments in R&D, talent accumulation, intellectual property, state-of-the-art facilities, and technical know-how needed to compete in leading-edge node design, development and manufacturing, any decision to pause or discontinue our pursuit of Intel 14A and successor leading-edge process technologies may be effectively irreversible.

Previous report

Recently elevated geopolitical tensions, volatility and uncertainty with respect to international trade policies, including tariffs and export controls, may have a material adverse impact on our business, the markets in which we compete and the world economy.

Previous report

In recent months, markets, businesses and consumers have reacted adversely to geopolitical tensions, volatility and uncertainty in international trade policies. Among other things, significant new and expanded tariffs, reciprocal tariffs, and other trade restrictions, have been imposed and modified, and selective tariff exemptions granted, often suddenly and with little notice, impacting a broad range of raw materials and goods, and global trade more generally. In particular, tariffs and other trade restrictions between the US and China have escalated dramatically and included high tariff and reciprocal tariff rates, the imposition of enhanced US export controls on high performance integrated circuits designed to limit access to such semiconductors in China, the imposition by China of tariffs applying to US-origin semiconductors such as those manufactured by us in the US, while exempting semiconductors manufactured outside the US, as is the case with our fabless competitors, and limitations by China on the export of rare earth minerals critical to the functioning of a range of technology products and processes and where China is the primary source of global supply. The US government has signaled it may impose future additional tariffs related to semiconductors. As a US-based semiconductor manufacturer that designs and manufactures a significant portion of our products domestically, a significant portion of our revenue is derived from sales to customers that assemble computer products in Asia for consumption by consumers and businesses globally. In fiscal 2024, consolidated net revenue from sales (based on billing location of the customer) to China and other foreign markets was 29% and 46%, respectively. We have been and may continue to be disadvantaged in or lose access to such international markets as a result of tariffs, export controls, or other trade policies, and the mitigation measures we have taken or may take in the future, including potential re-balancing of our manufacturing between regions, may not be effective or able to be effectuated in a timely manner, or at all. To the extent our customers, including multinational companies, assemble computer products in China and other foreign markets and sell them into the US end market, the imposition of tariffs in the US could adversely affect demand for their computer products, which could in turn adversely affect demand for our semiconductors. Further, our supply chain depends on globally sourced components and raw materials, including various rare earth minerals, that may become difficult or more costly to obtain, which may impair our ability to manufacture our products and increase our costs. We may be unable to fully or even partially pass along any increased costs to our customers, especially where we may be disproportionately impacted as compared to our competitors or where demand for semiconductor products is adversely impacted. The continuation, increase or expansion of tariffs and ot…

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