Is Intel in the middle of one of the greatest turnarounds in business history? Or has Washington just committed to pouring tens of billions of dollars into a flailing has-been in a vain attempt to claw back a lead in global chip manufacturing?
The enormity of the bet that the US is making was laid bare this week, as Intel revealed just how big a hole the manufacturing side of its business is in. Had it not been for a change to its depreciation policies, the company would have reported a staggering loss of $11.2bn from manufacturing last year on sales of $18.9bn. Even after extending the life of some of its manufacturing equipment from five to eight years, it was still left with nearly $7bn of red ink.
This isn’t even the worst of it. The company predicts its manufacturing losses will reach their nadir this year, before a slow recovery. Its already-battered shares fell another 8 per cent.