Intel Falls as Manufacturing Snags Bedevil Comeback | Bloomberg Tech 1/23/2026

Key Concepts

• Intel’s Manufacturing Issues: Problems with yield and production impacting sales outlook, potentially hindering its foundry business.
• H200 Chip Approvals in China: Beijing granting initial approval for Alibaba, Tencent, and Bytedance to prepare orders for NVIDIA’s H200 chips, with caveats.
• TikTok/ByteDance Deal: Agreement reached to operate in the U.S., addressing national security concerns.
• AI Investment & Returns: Focus on capital expenditure (CAPEX) in AI and the ability to monetize these investments.
• Tech Stock Valuations: Concerns about valuations, particularly Intel, and the sustainability of growth.
• Foundry Business Competition: Intel’s ambition to compete with TSMC in the foundry market and the challenges it faces.
• Geopolitical Impact on Tech: Influence of geopolitical factors (US-China relations) on the tech industry, particularly chip sales.

Market Overview & Volatility

The week concluded with a slight gain for the NASDAQ (.6%), following a volatile period influenced by geopolitical events. The focus shifted towards chip stocks, particularly Intel, which experienced a significant decline. Bitcoin saw some recovery, but remained below $90,000. Overall market sentiment is shifting, with a rotation towards cyclical sectors and memory/storage companies like Sandisk and Micron.

Intel’s Struggles & Foundry Ambitions

Intel’s stock plummeted after warning of manufacturing problems, leading to a sales outlook below investor expectations. This represents the largest drop since August 2022, despite a 7% rise earlier in the year. The core issues stem from a miscalculation of demand for server chips and problems with yield (the number of usable chips per production run).

CEO Lip-Bu Tan explained that Intel didn’t adequately prepare for demand and lacked sufficient production capacity. This impacts Intel’s foundry business, as potential external customers require maximum efficiency and high yield rates. Analysts suggest that low yield hinders Intel’s ability to attract external customers and compete with TSMC.

Tan emphasized the high cost of building and equipping factories, stating he won’t invest further until firm customer commitments are secured. Wall Street remains in a “wait and see” period regarding Intel’s foundry ambitions, with concrete orders not expected until late 2024/early 2025. Gross margins are also a concern, currently at 7.9% compared to a historical 60%+, indicating challenges in the manufacturing process.

China Approves H200 Chip Orders

China has given initial approval for Alibaba, Tencent, and Bytedance to prepare orders for NVIDIA’s H200 AI chips. This suggests Beijing is prioritizing hyperscalers and moving towards approving imports, despite previous restrictions imposed by Washington.

The Trump administration had previously approved the H200 chips, but it remained unclear if China would allow their purchase. The approval comes with caveats: the chips cannot be used in sensitive industries like the military or state-owned enterprises. NVIDIA previously sold significantly into the Chinese market and sees substantial demand, representing a potential $50 billion opportunity.

While restrictions apply, the move is seen as a positive sign for NVIDIA, potentially signaling a broader easing of restrictions on chip sales to China. The Chinese government also aims to bolster its domestic chip industry, encouraging companies to purchase from domestic players like Huawei Technologies.

TikTok/ByteDance Deal Finalized

TikTok and Bytedance have reached a deal to operate in the U.S., addressing national security concerns. The details of the agreement were not fully disclosed, but it represents a resolution to a long-standing dispute.

Apple & Future CEO Succession

Apple’s stock is experiencing a challenging period, on track for its eighth consecutive weekly decline. Hardware chief John Ternus has been given oversight of Apple’s design teams (hardware and software), a highly prestigious role historically held by key figures like Steve Jobs and Johnny Ive. This move is widely interpreted as grooming Ternus as a potential successor to CEO Tim Cook.

While Ternus is considered the frontrunner, the COO remains another potential candidate. The expansion of Ternus’s responsibilities is being managed carefully to avoid undermining Cook’s authority. The upcoming launch of a foldable iPhone is expected to be a key focus for Ternus.

Tech Earnings & AI Investment

Upcoming earnings reports from Microsoft, Tesla, Meta, and Apple will be closely watched. A key focus will be on capital expenditure (CAPEX) in AI and the returns companies are realizing from these investments. Investors are looking for clear guidance on AI monetization and the impact of increased memory chip prices on Apple’s margins.

Private Tech Company Valuations & IPOs

The trend of tech companies staying private for longer continues, driven by regulatory changes and a desire for focused growth. Companies like SpaceX and Anthropic are potential IPO candidates in 2026, representing a significant shift in market capitalization from private to public markets.

Valuations are a key concern, particularly for Intel, with some analysts believing its recent surge is unsustainable. The secondary market is becoming more active, providing liquidity for private company shares. Companies are prioritizing long-term partnerships and value-added investors.

Amazon Layoffs & Market Shifts

Amazon is preparing to lay off thousands of corporate employees, following previous cuts announced earlier in the year. This reflects a broader trend of cost-cutting in the tech sector. Market momentum is shifting, with a rotation towards cyclical sectors and companies focused on memory and storage.

Synthesis/Conclusion:

The tech landscape is undergoing significant shifts, marked by geopolitical tensions, evolving valuations, and a focus on AI investment. Intel faces substantial manufacturing challenges, while NVIDIA benefits from easing restrictions in China. The trend of companies staying private longer continues, with potential mega-IPOs on the horizon. Upcoming earnings reports will be crucial in assessing the sustainability of growth and the returns on AI investments. The market is becoming more nuanced, with a rotation towards different sectors and a greater emphasis on fundamental performance.