On August 9, The Wall Street Journal reported that Intel Chairman Frank Yeary earlier this year explored plans to spin off the company's contract chip manufacturing business and even sell it to Taiwan Semiconductor Manufacturing Co. (TSMC)—a move strongly opposed by newly appointed CEO Lip-Bu Tan.

According to the report, Yeary, a former investment banker, considered proposals to either separate Intel Foundry Services (IFS) into an independent entity jointly owned by Intel, TSMC, and major fabless players such as Broadcom or Nvidia, or to sell all or part of Intel's manufacturing operations to TSMC, granting it operational control and the task of improving Intel's process technology. Several directors supported Yeary's ideas, triggering internal divisions that ultimately stalled some of Tan's strategic initiatives.

Tan, who became CEO in March, has argued that maintaining in-house manufacturing is essential to Intel's competitiveness and to protecting U.S. semiconductor supply chains from overreliance on foreign producers like TSMC and Samsung. Technically and commercially, industry insiders note that TSMC has little incentive—and significant challenges—in taking over Intel's fabs, given differences in process technology, tool calibration, supply chains, and the competitive risk of helping a direct rival.

The leadership tensions have deepened in recent weeks after U.S. President Donald Trump publicly called for Tan's resignation, citing alleged conflicts of interest over his prior business ties with China. Trump's remarks came shortly after U.S. senators raised questions about Tan's past roles at Cadence Design Systems and his venture capital firm, which had invested in Chinese companies.

Intel has publicly reaffirmed its support for Tan, stating that the board and management are aligned on advancing U.S. national and economic security interests in line with the administration's “America First” agenda. Still, insiders say the disputes have slowed key initiatives, including a planned multibillion-dollar capital raise and a potential AI company acquisition aimed at narrowing the gap with Nvidia and AMD.

Intel's manufacturing unit, which accounted for roughly one-third of revenue last year but remains unprofitable, is seen by some as politically vital for ensuring domestic chipmaking capacity. However, Yeary and other directors have reportedly sought to delay major investments, such as U.S. fab expansion, until at least 2026. Tan has instead prioritized cost-cutting, including a 15% workforce reduction, canceling a European mega-fab project, and slowing construction in Ohio.

The dispute comes as Intel struggles to recover from a steep market capitalization decline after missing the AI boom. Tan's appointment initially boosted investor optimism—Intel shares jumped over 13% on his first day—but the so-called honeymoon period ended quickly amid strategic disagreements.

Analysts warn that prolonged uncertainty over leadership could damage Intel's turnaround prospects. “Either fully back your CEO or make a change,” said David Wagner, portfolio manager at Aptus Capital Advisors. “Intel can't afford to let this drag on for months.”