At a tech conference in San Francisco this week, admirers surrounded Lip-Bu Tan, the chief executive of Intel, waiting to take selfies with a man few of them had heard of before last year.
The spectacle made Matthew Sysak, a senior executive at the tech company Lumentum, shake his head. Watching from a few feet away, he compared the attention on Mr. Tan to the industry’s rock star treatment of Jensen Huang, the chief executive of the chip maker Nvidia, now the world’s most valuable company.
“It’s a traveling circus,” he said in disbelief.
Not long ago, Intel, which was once one of the most powerful tech companies in the world, was described as Silicon Valley’s fallen icon. Sales were plummeting, costs soaring and debts mounting. The U.S. government intervened last summer and took a 10 percent stake in the company.
Now, Intel is showing signs of a turnaround. Its value has more than tripled to $650 billion, its business has started to rebound behind the artificial intelligence boom, and it has added big customers like Nvidia and Apple.
The stakes are high for the company and Mr. Tan, who took over in March last year. Intel is a cornerstone of the U.S. government’s push to rebuild the nation’s semiconductor manufacturing and wean Silicon Valley off its dependence on Taiwan.
If Intel is unable to turn itself around now — when nearly the entire chip industry is cashing in on A.I. — a fix may not possible, said Chris Miller, the author of “Chip War,” a book that recounts the rise of the semiconductor industry.
“As the only American manufacturer of cutting-edge chips — and the only firm with its high-end research in the U.S. — Intel’s fate will shape the future of America’s chip industry and determine the extent to which the country relies on Taiwan,” Mr. Miller said.
Less than a year ago, President Trump demanded that Mr. Tan step down as Intel’s chief executive because of concerns that the company he previously led had illegally sold chip technology to China. Days later, the two met and negotiated a deal for the government to take the 10 percent stake for $8.9 billion. The money was the remainder of a federal grant that Intel had been promised through the CHIPS and Science Act, a bipartisan law aimed at making the United States less reliant on Asia for semiconductors.
The investment was a shot in the arm, said Sanjay Natarajan, a senior executive with Intel’s manufacturing business until last year. It helped lift the company’s market value and signaled that the U.S. government had a vested interest in rebuilding Intel’s business.
“The Trump administration was clearly picking winners and losers,” Mr. Natarajan said. “They signaled they want Intel to do well.”
It was unclear then if the administration’s involvement would be a blessing or a burden. But in the months that followed, Commerce Secretary Howard Lutnick began pressuring tech leaders to work with Intel, including Mr. Huang of Nvidia, Elon Musk of SpaceX and Tim Cook of Apple, said a senior administration official who wasn’t authorized to speak publicly.
The pressure came as A.I. reshaped the chip market. Tech giants were pouring hundreds of billions of dollars into chips for data centers. A.I. personal assistants known as agents — relying on chips called central processing units, or CPUs, Intel’s signature product — gained popularity. At the same time, Taiwan Semiconductor Manufacturing Company, which makes more than 90 percent of the world’s advanced semiconductors, was flooded with more orders than it could fill.
Intel, which opened a factory near Phoenix that uses new technologies to make denser, more energy-efficient chips, immediately began to benefit from the new dynamics. In September, Nvidia said it would invest $5 billion in Intel and use custom-made Intel CPUs in personal computers and data centers. Intel shares rose 23 percent on the news.
In May, Mr. Musk and Mr. Tan agreed that Intel would provide its technology to support a chip-making operation that Mr. Musk is developing called Terafab. And in recent months, Apple, which is among the world’s largest chip customers, agreed to begin manufacturing a small portion of its laptop chips at Intel’s factories as early as 2027, four people familiar with the confidential agreement said. Some smartphone chips may follow.
After Intel spent five years developing new technologies but failing to net a major customer, the deals were a win, Mr. Miller said.
Representatives for Mr. Musk and Apple did not respond to requests for comment.
Each deal carries major caveats. In the agreement with Nvidia, each company will be selling the product, which means the amount of money that Intel makes on each chip can depend on who sells it, said three people close to the company, speaking on the condition of anonymity to discuss the confidential agreement.
The agreements with Mr. Musk and Apple hinge on Intel’s progress with a new manufacturing process it is developing called 14A. This fall, it has promised to deliver those companies a tool kit to test the technology before final commitments, one of the people close to Intel said.
In the face of that uncertainty, Mr. Tan has pushed the company to cut costs. It has reduced staff through layoffs and attrition to around 78,500 employees, from the 108,900 it had when he arrived. It wants to eventually be a 75,000-person company.
The rise of A.I. agents has revived Intel’s data center sales. In April, it struck a deal to sell custom data center chips to Google and reported that quarterly sales of data center and A.I. products had risen 22 percent from a year earlier, to $5.1 billion.
But the company continues to lose money and market share. Its share of chips sold for servers has declined from nearly 100 percent a decade ago to about 65 percent, according to Bernstein Research, which says Arm and Advanced Micro Devices have gained with superior technology.
In April, Intel said revenue in its first quarter had risen 7 percent from a year earlier to $13.6 billion, but it recorded a loss of $3.7 billion, including a $2.5 billion operating loss in its manufacturing business.
Catching up to rivals won’t be easy. Intel has reduced what it spends to develop future technology and last year slashed nearly 90 percent from its budget for Intel Labs, its research group that has produced features to make chips more powerful and efficient, said two former employees who spoke anonymously about the business changes.
Intel needs the A.I. boom to stay red hot. The company’s losses are expected to fade next year as it wraps up years of aggressive spending to build chip factories in Arizona and New Mexico. Bernstein Research predicts that Intel will report a profit of $4.7 billion in 2027.
Mr. Tan knows the turnaround has only just begun. He has told friends that he expects it to take a minimum of five years, said John Shoven, who was the chairman of Cadence Design Systems, the chip company Mr. Tan previously led.
“He knew this was not going to be quick,” Mr. Shoven said. “It’s a long road to go, but he’s off to a good start.”
