^{Source: Hunt Scanlon Media}

A Strong Start, But Troubled Waters Ahead

Intel Corp. posted stronger-than-expected first-quarter results, partly boosted by clients who rushed to stockpile chips before fresh tariffs kicked in. But beneath the surface of these solid earnings, the semiconductor giant sounded a loud and clear warning: escalating trade tensions and unpredictable policy shifts are pushing the global economy toward a potential recession.

During Thursday’s earnings call, Intel’s Chief Financial Officer David Zinsner didn’t mince words: “The increasingly fluid trade policies in the U.S. and abroad, coupled with regulatory uncertainties, have heightened the likelihood of an economic slowdown. The chance of a recession is definitely growing,” he said.

Intel shares dropped over 5% in after-hours trading, as the company’s guidance for the upcoming quarter fell short of Wall Street expectations.

Forecast Clouded by Trade Uncertainty

Intel now expects second-quarter revenue in the range of $11.2 billion to $12.4 billion, a notably wide projection. Zinsner attributed this “wider-than-normal” guidance directly to trade-related unpredictability, specifically tariffs implemented by the U.S. under former President Donald Trump and retaliatory actions from global trade partners.

The tech sector, already grappling with supply chain disruptions and high inflation, is finding itself at the frontline of geopolitical trade friction. For Intel, a company whose supply chain stretches across the U.S., Taiwan, South Korea, Europe, and China, that uncertainty has become a financial variable.

Intel's Global Footprint Is a Double-Edged Sword

While Intel has invested heavily in U.S.-based manufacturing, including its $20 billion fab in Ohio, its operations are undeniably global. Advanced processors are produced in collaboration with Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung, and it imports essential chipmaking machinery from ASML (Netherlands). Many raw materials and components also come from China—making Intel vulnerable to import duties, export restrictions, and diplomatic tensions.

Zinsner explained that while Intel’s global footprint offers some insulation, it does not eliminate risk:
“We can mitigate some of the impact through diversified operations, but rising costs are inevitable under current trade dynamics,” he noted.

Market Contraction Looms

Intel now anticipates a potential shrinkage in the total addressable market for its chips—particularly if consumers and businesses delay or cut back on tech spending in response to higher prices and economic uncertainty. This is especially concerning for segments like laptops, desktops, and AI-capable hardware.

"The biggest risk we foresee is a slowdown in investment and purchasing behavior," Zinsner said. "Rising costs and the uncertain macroeconomic landscape are leading both companies and consumers to think twice before spending."

Even Intel's Michelle Johnston Holthaus, CEO of Client Computing, echoed these concerns:
"Tariffs and macroeconomic headwinds are prompting businesses to hold off or opt for lower-end systems built on older-generation chips," she said.

AI Export Controls: Another Headwind

On top of tariffs, Intel is also navigating tightening U.S. government restrictions on exporting advanced chips used in artificial intelligence to countries like China. These export licensing requirements are further complicating Intel’s long-term planning and sales forecasts.

A New CEO, A New Strategy

Thursday’s call was the first earnings report under new CEO Lip-Bu Tan, who took the helm last month. Tan acknowledged the challenges ahead and outlined plans to trim operational and capital expenditures to boost efficiency.

"We’re focusing on making Intel leaner and more resilient," he said, hinting at broader cost-cutting initiatives across the company.

Context: A Broader Economic Picture

Intel’s warning comes amid broader market concerns about inflation, central bank policies, and slowing global growth. According to the International Monetary Fund (IMF), global GDP growth is expected to decelerate to 2.8% in 2025, down from 3.5% in 2023.

A recent Goldman Sachs report also flagged increased recession risks in the U.S. by mid-2025, especially if interest rates remain elevated while consumer demand softens.

Even Fed Chair Jerome Powell, in his latest remarks, admitted that uncertainties around global trade and supply chains remain “significant risk factors” for the U.S. economy.

Takeaway: A Tech Giant’s Outlook Mirrors a Fractured Global Economy

Intel’s concerns are more than just corporate caution—they reflect the mounting challenges faced by companies operating across increasingly divided global markets. With consumers tightening their wallets, businesses pausing investments, and global governments revisiting trade policies, the economic terrain ahead appears rocky.

For now, Intel is holding steady—but the tremors of a broader slowdown are growing harder to ignore.

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