It's possibly the hardest job in corporate America and Lip-Bu Tan is likely the best appointment. But it might be too much to ask Intel's new CEO to restore an icon of U.S. high-tech manufacturing to its former glory.

Reviving Intel's chip-fabricating operations is the most difficult part of Tan's job, and one that chimes with the Trump administration's bid to revive American manufacturing. Secure supply chains are key to that goal and ensuring them for semiconductors is arguably the most important pillar -- beyond even steel or cars.

However, President Donald Trump might make Tan's job even harder as he campaigns for a stop to the Chips Act -- which is set to grant up to $8.5 billion in direct funding to Intel as a big incentive to set up new factories across the U.S. Instead, the president hopes to achieve similar goals via the threat of tariffs, which he claims encouraged Taiwan Semiconductor Manufacturing -- the company that replaced Intel as the world's leading maker of advanced chips -- to commit $100 billion of investment in the U.S. Reports suggest the administration might not be averse to the Taiwanese company also taking over Intel's chip-making facilities.

Judging by his letter to Intel employees, Tan intends to maintain the company in its present form rather than spinning off the chip-manufacturing operations. The new CEO has more than 20 years of semiconductor and software experience, an engineering background, and a track record of leading a turnaround at Cadence Design Systems. But that might not be enough for Intel to take on Taiwan Semiconductor on its home turf, while also catching up to rivals such as Nvidia in the field of artificial-intelligence chips.

Tan will be under pressure to convince both the market and politicians that he has the solution to Intel's problems. But it's possible that's a job beyond any chief executive, no matter how gifted.

-- Adam Clark

***

Lip-Bu Tan Faces Big Challenges at Chip Maker

Intel is bringing back former board member Lip-Bu Tan in a new role, as the chip maker's CEO. His task is a challenging one. Tan, who assumes the job next week, will have to restore Intel to its former status as a chip powerhouse and stabilize a business that is struggling to keep pace with rivals.

   -- His return (he left Intel's board last August after a dispute over the 
      company's direction) also comes as Intel is in the middle of a costly 
      attempt to boost its foundry business. The company reportedly has been in 
      talks with various suitors or partners who could get involved in various 
      areas of its business. 
 
   -- Tan is formerly the CEO of Cadence Design Systems, a company that makes 
      tools to design chips that he helped turn around. Intel cited Tan's deep 
      relationships across the product and foundry sectors and his proven track 
      record of creating shareholder value. 
 
   -- He takes over from interim CEOs David Zinsner and Michelle Johnston 
      Holthaus, who were installed temporarily after former CEO Pat Gelsinger's 
      resignation in December. Zinsner and Johnston Holthaus will remain in 
      their previous roles with the company. 
 
   -- Intel was a leader in the American chip industry for decades until 
      recently, when some manufacturing missteps and a shift toward artificial 
      intelligence drew demand to rivals. Nvidia, the leader in AI chips, has a 
      $2.8 trillion market value, while Intel's is about $89 billion. 

What's Next: Intel executives have contemplated potential deals with other chip companies, including a separate board for its manufacturing operations, and among the options explored is a break up of the company, The Wall Street Journal reported.

-- Adam Levine and Liz Moyer

***

Cooler February Inflation Doesn't Mean Fed Will Lower Rates

A cooler-than-expected inflation reading is unlikely to sway the Federal Reserve to lower interest rates next week or in May. Analysts who had braced for higher readings were relieved that labor conditions and overall economic growth remain stable, even if inflation remains above the central bank's 2% target.

   -- The consumer price index rose by 2.8% in February from a year earlier, 
      while core CPI excluding food and energy costs ticked up 3.1%. Both were 
      the first deceleration in inflation since September. 
 
   -- The probability of at least one quarter-point rate cut through the Fed's 
      May meeting fell to 30.5%, while the odds of no cuts through June rose to 
      19.9%. Neil Dutta, Renaissance Macro Research's head of economic research, 
      said CPI won't "meaningfully change the dial for the Fed." 
 
   -- The price of goods rose 0.2% from January, partly because of President 
      Donald Trump's 10% tariffs on Chinese imports. But Pantheon 
      Macroeconomics' chief U.S. economist Sam Tombs said half that increase 
      was because clothing prices rebounded after January's severe winter 
      weather kept consumers from shopping. 
 
   -- In other categories, new vehicle prices dropped 0.1% from the month 
      before, while the prices for used cars and trucks rose 0.9%. While 
      grocery prices overall were flat, however, egg prices jumped 10.4% for 
      the month, and analysts expect them to stay elevated in the near term. 

What's Next: Underlying disinflation not only helps offset the effects of the Trump administration's tariffs on a variety of imported goods, it gives Fed officials some flexibility to cut rates should labor conditions or economic growth start to weaken. The Fed releases its next rate decision on March 19.

-- Megan Leonhardt and Janet H. Cho

***

With Shutdown Deadline Looming, Democrats Won't Budge on Bill

Senate Democrats are backing a one-month extension to government funding as time to avert a government shutdown is rapidly coming to an end. Minority Leader Chuck Schumer said Wednesday his GOP colleagues don't have the votes to successfully pass the House funding bill.

   -- Both sides are accusing the other of bringing Americans to the brink of 
      another damaging shutdown. Schumer is blaming Republicans for not getting 
      input from congressional Democrats on the package. Republicans are 
      prepared to blame Democrats for blocking the deal. There is currently 
      only one option on the table. 
 
   -- Senate Democrats have a dilemma. This standoff is their way to push back 
      at the Trump administration's GOP allies and Elon Musk's sweeping cuts to 
      the government. But a shutdown, including the furlough of civilian 
      workers, could also embolden the administration's efforts to shrink the 
      federal workforce. 
 
   -- The Education Department is cutting half its staff under a plan to 
      eliminate it entirely, while the Veteran's Affairs Department is slashing 
      70,000 workers. The House bill extends funding through Sept. 30, with a 
      $6 billion increase in military spending and $13 billion in cuts for 
      nondefense spending. 
 
   -- The gap between federal revenue and government spending widened to more 
      than $1 trillion in the first five months of the fiscal year, which 
      starts in October, driven by spending on interest, military programs, 
      public benefits, and security, the Treasury Department said. 

What's Next: Congress has to get a funding extension passed and on President Donald Trump's desk by the end of Friday. And that isn't all the government faces. Canada and the European Union announced a set of retaliatory tariffs on American imports tailor-made to cause the most pain for Republican-leaning states.

-- Liz Moyer, Karishma Vanjani, and Joe Light

***

Adobe Earnings Topped Expectations, But Guidance Disappointed the Street

Adobe earnings came in above Wall Street's expectations -- but that might not be enough to impress investors. Questions remain about whether the creative-software company will be able to monetize artificial intelligence to boost its profit and revenue this year.

   -- Adobe posted a first-quarter profit of $5.08 a share, as revenue rose 10% 
      from a year ago to $5.71 billion. Analysts surveyed by FactSet were 
      expecting the company to report earnings of $4.97 a share on revenue of 
      $5.66 billion. 
 
   -- "Really strong print, really strong quarter," Adobe CFO Dan Durn told 
      Barron's Wednesday. "We feel really good about the innovation we're 
      delivering, the utilization and engagement, the usage of that technology, 
      and now the monetization to complete the picture for investors." 
 
   -- But Adobe's guidance looked a little soft. The company reiterated its 
      full-year outlook for 2025 revenue to be between $23.3 billion and $23.6 
      billion, with adjusted earnings still expected to be between $20.20 a 
      share to $20.50 a share. The midpoints of those figures are just below 
      Wall Street's revenue estimate of $23.5 billion and its earnings forecast 
      of $20.39 a share. 

What's Next: As of Wednesday's close, Adobe stock had declined 1.4% this year, with investors worried about the pace at which it's monetizing AI initiatives. Durn said the company is aiming to double annualized recurring revenue, a key metric for its subscription-based model, this year.

-- Angela Palumbo

***

Promising Obesity Drug Could Someday Challenge Novo Nordisk, Eli Lilly

Swiss drugmaker Roche's announcement of a licensing deal to develop Petrelintide, an experimental obesity drug from Danish biotech Zealand Pharma, increased investors' worries about a potential new threat to Novo Nordisk's and Eli Lilly's dominance of the weight-loss market.

   -- Petrelintide is a once-weekly injectable meant to mimic the hormone 
      amylin, which is released with insulin when people eat. It slows the 
      emptying of food from the stomach and promotes feeling full. Zealand said 
      it might be better tolerated than other drugs and could help preserve 
      lean muscle. 
 
   -- Novo's Wegovy, in contrast, targets the GLP-1 receptor, a protein in 
      cells that plays a key role in regulating blood sugar and other metabolic 
      functions. Companies have been exploring amylin analogs as a GLP-1 
      alternative that might cause less stomach discomfort. 
 
   -- Investors have grown uneasy about Novo Nordisk's long-term prospects 
      after two underwhelming clinical trials of its next-generation follow-up 
      drug to its blockbuster GLP-1 drug Wegovy. Novo Nordisk's stock is down 
      13% this year and down 44% over the past 12 months. 
 
   -- Roche said Petrelintide could cost it up to $5.3 billion. Zealand Pharma 
      will receive an upfront payment of $1.65 billion cash, and will share 
      profits and losses on a 50/50 basis in the U.S. and Europe. 

What's Next: Petrelintide is still being tested in Phase 2 trials, but the deal foreshadows an increasingly competitive weight-loss drug landscape later this decade. The agreement is expected to close in the second quarter of 2025.

-- Mackenzie Tatananni, Josh Nathan-Kazis, and Janet H. Cho

***

The stock markets have taken investors on a wild ride since last week. Tariffs are making investors anxious for a few reasons. First, they can increase costs for companies that rely on importing foreign goods, and that can impact profit and share prices. Second, those price increases can be passed down to the consumer, putting more financial stress on consumers and perhaps influencing them to buy less. And those two issues can lead to a recession.

MarketWatch talked to financial advisors about what they are telling investors.

For more on this, read here.

-- Gordon Gottsegen

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 13, 2025 06:58 ET (10:58 GMT)

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