Intel foundry push faces critical test after record October stock plunge

The shortfall comes as the PC market suffers from soaring costs for memory and other components. Intel still counts on its PC segment for roughly half of its revenue, and consumers are increasingly choosing not to upgrade. The stock fell 29% on Friday, its worst day since the 1970s, and was down another 8% in Monday trading.

Intel has spent half a decade, and a good chunk of its $108 billion in capital expenditures over that stretch, trying to challenge Taiwan Semiconductor Manufacturing Company. It still has no marquee customer for its most advanced chips and primarily manufactures chips for its own products. After the U.S. government took a 10% stake in Intel in August 2025 and Nvidia followed with a $5 billion investment, the stock rose sixfold over 10 months before peaking in June.

Intel's data center business recorded 78% growth in the third quarter from a year earlier to $7.3 billion, and chief executive Lip-Bu Tan said he sees the global market for server processors increasing as much as five times over the next five years to about $200 billion. But Intel said it cannot make enough chips to fill demand, pointing to industry-wide supply constraints for wafers, substrates and memory, many of the same factors hurting PC sales.

In response to the capacity shortage, Intel said it is shifting some Oregon factory capacity away from making wafers for its advanced 18A chips to an older node, known as Intel 3, used for data center products. Intel is counting on 18A to attract outside foundry customers, so the shift could complicate that effort.

David Yoffie, a Harvard Business School professor who previously spent almost three decades on Intel's board, said the latest moves are hardly welcoming to prospective foundry customers. "They're concerned that if Intel doesn't actually have excess capacity beyond its own demand, that they're just not a very credible supplier," Yoffie said. If the company does not find a large-scale foundry customer within a year, he said, "then the stress on Intel's economics are going to start to show even more dramatically". He argued that "the right solution is for Intel to spin off the foundry business", calling it "not only the best solution, but maybe the only solution."

Jordan Klein, an analyst at Mizuho Securities, said Intel has "more control over their destiny" than most chipmakers because it is one of the only companies able to manufacture and package the advanced chips it needs for its own products. "If you don't have enough capacity, you leave revenue and money on the table," Klein said. He said AMD is likely the only major chipmaker not interested in manufacturing at Intel, because the two compete directly in the CPU market, calling it a "competitive, secrecy, privacy issue".

Intel's 18A chips for its own use are in high-volume production out of Arizona, with a second fab in the works. A first structural truss was recently installed at Intel's new Ohio facility, although the project is nearly five years behind schedule. Yoffie said Broadcom and Qualcomm may also hesitate to manufacture at a company that competes with them on the product side.

Tan has taken a more cautious approach to foundry spending than his predecessor Pat Gelsinger, who was ousted in late 2024 after a four-year tenure aggressively pursuing foundry investments. Tan has limited spending until customer demand is locked in. He said on Thursday that “a couple customers” would be announced in the coming two quarters. Intel didn't respond to a request for comment.

Yoffie said the U.S. needs Intel to succeed. "Ultimately, TSMC can only create maybe 20-25% of their global capacity in the United States and that will still take several years," he said. "If we have no American foundry and we run into any number of geopolitical problems, supply chain problems like we had under Covid, that is going to be bad for the country and bad for the American semiconductor industry."