Intel (NASDAQ:INTC) is placing significant emphasis on its foundry division. Over the last four years, the semiconductor giant invested about $95 billion in capital expenditures to redefine itself as a leading-edge foundry, with the goal of competing against TSMC and Samsung. Nonetheless, the stock has declined nearly 40% from its peak in 2024, as investors remain doubtful regarding these plans. The foundry sector suffered a loss of nearly $13 billion last year. However, improvements may be on the horizon, thanks to Intel’s new process nodes, which are in advanced stages of rollout. What developments are occurring in the foundry sector?
18A Process Will Make Or Break Foundry Bet
Intel relies on its 18A process, regarded as its most sophisticated manufacturing technology to date, featuring a 1.8-nanometer process node, to revitalize its foundry business. Intel indicates that this node is currently in risk production, where a limited number of chips are generated to evaluate and enhance the production process ahead of mass manufacturing, which is scheduled to commence later this year. Laptops utilizing 18A-based processors are already undergoing sampling with OEMs.
The process develops chips utilizing technologies such as RibbonFET gate-all-around transistors and PowerVia backside power delivery, which enable the creation of smaller transistors that enhance performance and power efficiency. PowerVia may provide significant benefits in AI as well as high-performance computing applications. Overall, Intel’s process node is marketed as being faster and consuming less power compared to TSMC’s rival node, which is also anticipated to enter mass production around the same period. However, TSMC’s chips may possess advantages in aspects of density and cost.
Intel has also introduced a high-performance variant designated 18A-P, for which it has initiated early wafer production at its facilities. The company is additionally developing an advanced iteration termed 18A-PT, which facilitates 3D stacking with hybrid bonding interconnects, allowing for vertical die stacking directly on top of its most advanced node. While competitor TSMC already has a comparable process in its output, 18A-PT could allow Intel to produce highly integrated chiplet designs with enhanced density and efficiency.
Next Up: The 14A Node
During the recently concluded Intel Foundry Direct 2025 event, Intel verified that it was now collaborating with key clients for its 14A process (the 1.4nm equivalent), which is the successor to 18A. Test chips are being prepared for tape- out, and the node is set to incorporate an enhanced version of Intel’s backside power delivery technology. Intel aims for risk production of the new process by 2027. TSMC’s competing 1.4 nm-class node is projected to debut only in 2028. This could potentially provide Intel with a one-year lead, helping it attract more high-performance computing and AI chip clients.
Intel And America’s Chip Comeback
Intel appears to be at the forefront of the United States’ initiative to reshore semiconductor fabrication. Currently, Intel stands as the sole U.S.-based foundry offering both leading-edge processes and advanced packaging. Although industry leader TSMC has been increasing its foundry capabilities in the U.S., a recent Taiwanese law prevents it from producing its most advanced chips abroad. This scenario positions Intel as the only domestic entity with leading-edge manufacturing capabilities. As chips become essential for a range of applications from AI to defense, they have been classified as a national security concern by the U.S. government. Given its extensive domestic chipmaking footprint, Intel could be exceptionally well-placed to leverage this trend.
Intel Stock Volatility
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Intel shares are currently trading at below 25x projected 2026 earnings, which represents a reasonable valuation. Admittedly, Intel’s declining earnings in recent years, loss of market share to AMD in the PC and server sectors, and the broader transition from CPUs to GPUs in the AI era pose risks for the stock. Nonetheless, if the foundry sector performs well with its new 18A process and secures major clients, the stock could experience significant upside. We assess Intel stock at $25 per share, approximately 17% above the current market value. Refer to our examination of Intel’s valuation for more insight into our price estimate for Intel.
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