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Intel (INTC) is trading sharply lower following a Reuters report indicating that new CEO Lip-Bu Tan is considering significant changes to its contract manufacturing business, adding further uncertainty to the company’s already challenged turnaround plan. According to the report, Tan is exploring the possibility of abandoning external sales of the 18A manufacturing process, a cornerstone of former CEO Pat Gelsinger’s strategy to position INTC as a competitive foundry against Taiwan Semiconductor Manufacturing (TSM).

• INTC has dismissed the Reuters report as “hypothetical scenarios or market speculation,” asserting that its lead customer for 18A remains Intel itself, with plans to ramp up production of its Panther Lake laptop chips later in 2025. However, investors are unwilling to give INTC the benefit of the doubt, given the company’s prolonged struggles, including significant market share losses in data centers and PCs, painful stock declines, and persistent financial losses in its foundry business, which reported a $13.4 bln loss in 2024.
• The market’s skepticism is compounded by INTC’s history of execution challenges and a bureaucratic culture that has hindered its ability to capitalize on the AI-driven semiconductor boom, leading to a sharp sell-off as investors question the company’s strategic direction under Tan.
• Since succeeding Gelsinger in March 2025, Lip-Bu Tan has moved swiftly to address INTC’s financial and operational inefficiencies through aggressive cost-cutting measures. Notable actions include laying off 15,000 employees in August 2024, with further reductions targeting middle management to streamline operations, and divesting non-core assets such as part of its Altera stake. Up until the Reuters report, Tan had publicly supported Gelsinger’s 18A strategy, emphasizing its role in upcoming products like Panther Lake and Clearwater Forest, while advocating for a more measured pace of foundry expansion to preserve cash. This cautious approach was evident in INTC’s decision to delay fabrication plant completions in Ohio and Germany, reflecting Tan’s focus on aligning capital expenditures with market demand.
• INTC has two significant chip releases planned using the 18A process: Panther Lake, a next-generation laptop chip with AI capabilities set for launch in 2H25, and Clearwater Forest, a server CPU slated for 1H26. A move away from marketing 18A to external foundry customers could disrupt these launches by limiting economies of scale and reducing the process’s strategic importance, potentially forcing INTC to reallocate resources to redesign chips for alternative nodes like 14A.
• While INTC has stated it will continue using 18A for in-house chips and committed to external customers like Amazon (AMZN) and Microsoft (MSFT), abandoning broader 18A foundry sales could signal a lack of confidence in the process’s competitiveness, particularly as it reportedly lags TSM’s N2 technology.
• In response to 18A’s challenges, Tan is reportedly considering steering foundry customers toward INTC’s 14A process, a next-generation node expected to offer advantages over TSM’s comparable technologies, potentially positioning INTC to better compete for major clients like Apple (AAPL) and Nvidia (NVDA). The 14A process promises a 15-20% performance-per-watt improvement over 18A, with a design tailored to meet external customer needs from the ground up, unlike 18A, which was initially developed for INTC’s internal use.

The Reuters report introduces significant uncertainty and doubt surrounding INTC’s turnaround efforts and the viability of its 18A process, which was intended to be a linchpin in reestablishing the company as a leading foundry and semiconductor innovator. While Tan’s aggressive cost-cutting and potential pivot to 14A signal a pragmatic approach to addressing INTC’s challenges, the prospect of a costly 18A write-off and ongoing struggles to secure foundry customers highlight the steep road ahead for Intel’s recovery.