Intel‘s struggles did not start yesterday, but years ago, and now the company faces problems across multiple fronts. It’s hard to say when things turned dark for Intel or attribute any particular business decision that led to this situation, but yet here we are: Intel is bleeding money, the performance of its products is behind offerings from AMD and Nvidia, its foundry efforts yet have to take off as its current process technologies are behind products fabbed at TSMC, and it has to lay off tens of thousands of employees to cut costs and attempt to break even in 2026.
## Fabs: Money losers, or key to success?
Historically, CPU design and manufacturing might have been instrumental to Intel’s success, but today, the Intel Foundry unit bleeds billions of dollars every quarter, whereas the company’s flagship client CPUs are produced by TSMC. Making chips internally almost automatically pushes gross margins to over 50%, unless Intel starts a price war and offers huge discounts to maintain market share.This is, regrettably, what is happening at Intel at this point, but we’ll dive into that topic a bit later.
Intel’s manufacturing and real estate assets cost around $108 billion,so Intel cannot just offload them to a consortium of investors. Moreover, the majority of Intel’s fabs can only be used to make Intel’s own products developed by the company itself. Currently, only select
Intel Cancels 20A Process Node, Turns to External Foundries – Likely TSMC
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Intel has made a meaningful shift in its manufacturing strategy, announcing the cancellation of its 20A process node. Originally intended for the Arrow Lake generation of CPUs, Intel will now rely on external foundries – widely believed to be TSMC – for this process technology.
This decision follows a period of challenges in Intel’s process technology roadmap. The 20A node was meant to be a crucial step towards regaining process leadership, but internal delays and complexities have led to its abandonment.Intel will now focus its resources on the 18A node, positioning it as the key to its future CPU lineups, including the Panther Lake and Nova Lake processors, as well as serving external clients.
The move to outsource the 20A node signifies a major change for Intel, which has historically prioritized in-house manufacturing. While Intel continues to invest in its own fabrication capabilities,leveraging TSMC for certain process nodes allows the company to maintain a competitive edge and possibly accelerate the delivery of advanced CPUs.
Details regarding the specific terms of Intel’s partnership with TSMC remain scarce, but this growth underscores the increasing complexity and cost of leading-edge semiconductor manufacturing.It also highlights the growing reliance on a handful of key foundries, like TSMC and Samsung, to produce the most advanced chips.## Intel’s 18A Node: A Foundry Crossroads?
Intel’s 18A process node is facing a critical juncture. Originally intended as a key offering for external foundry clients, recent developments suggest the company might be recalibrating its strategy, potentially shifting focus towards its internal product roadmap. This pivot stems from the inherent challenges of serving a diverse foundry market versus optimizing for Intel’s own CPU designs.
General-purpose process technologies like those offered by TSMC are designed and validated across a wide range of designs, from mobile request processors to massive AI and HPC processors, as the same node will serve dozens of companies with very different needs. This adds overhead in development time, test chip diversity, and third-party collaborations, but ensures broad compatibility and predictable yield for a wide customer base.
By contrast,nodes primarily optimized for CPUs may have specific voltage ranges and frequency targets,fewer validated device variants,fewer third-party IP options,and even narrower process windows. Therefore, to target a broader range of customers, Intel might need to do some additional homework, which may not make a lot of financial sense at this stage of development, as 18A is behind TSMC’s N2 in terms of time-to-market.
Though, if Intel does not land any major 18A customers, how will other potential clients know that Intel’s fabrication technologies are competitive with those from TSMC in terms of performance, yield, and costs? As the company has not abandoned its 18A as a foundry offering publicly, it is indeed possible that it may continue to target very specific client designs with this node. if the company succeeds in landing a customer or two with its 18A technology, it will earn money while also advertising the advantages of its fabrication technologies. If not, it will at least not invest millions in an endeavor that will not pay off.
Nonetheless, even if Intel’s 18A does not get many external clients, it will still be used to make Panther Lake, Nova lake (and this processor appears to be Intel’s attempt to get back into enthusiast-grade desktops with a monstrous 52-core offering), and other CPUs in the next several years, which will have a positive impact on Intel’s balance sheet.
14A: The true foundry node from Intel?
If Intel indeed wants to shift its foundry effort from 18A to 14A, this adjustment may suggest that the company may be repositioning its foundry strategy to leapfrog directly to the next generation, pot
Intel Considers Retreating from Leading-Edge Semiconductor Race, Potentially Ceding Ground to TSMC and Samsung
Intel recently warned that it is weighing whether to slow down or wholly stop work on its 14A manufacturing platform if it cannot secure a large outside client and if development does not meet crucial milestones. This is the first time the company has openly admitted it might step back from leading-edge process technologies, potentially leaving the most advanced production nodes to rivals like TSMC and Samsung. The move reflects a shift toward basing future node development on confirmed commercial demand rather than advancing purely for the sake of technology leadership.Intel’s 14A is an important node for the company, not only because it is its first fabrication process developed for foundry customers from the ground up, but also because it will be the first technology to use High-NA EUV lithography for multiple key layers, a leap that requires extremely expensive tools that cost roughly $380 million per unit.Outfitting a fab for high-volume output on 14A would demand tens of billions in equipment purchases (with hundreds of millions for High-NA EUV scanners) on top of the billions already spent on process R&D, so Intel’s executives want to ensure that the effort will pay off. On the one hand, they need to ensure that the technology delivers the right balance of performance and area scaling; on the other hand, they need volume commitments from external clients. However, by announcing that it is considering pulling out from the leading-edge semiconductor race, Intel could greatly hurt its reputation among potential customers for all of its nodes.
At present, Intel has at least one in-house product planned for the 14A platform, but management is leaving the door open to outsourcing. If the technology does not move forward, advanced designs that require greater transistor density and speed than 18A-P will be manufactured at an outside foundry (i.e., TSMC).
Should Intel shelve 14A and subsequent nodes, the company intends to continue producing the bulk of its portfolio on internal technologies up to 18A-P well into the next decade.This approach would allow Intel to cover most of its needs while avoiding large capital investments for tools and facilities that may go underused. Though, relying on outside fabs for top-tier designs could have long-term effects on profitability, especially if those products are key revenue drivers. Essentially, Intel will find itself in a situation similar to today’s, only without the necessity of investing billions in next-generation tools and fabs.
Intel’s current product mix: A bag of hurt?
Right now, Intel’s product portfolio is a mixed bag. While the company clearly has some competitive offerings in its mix,its manufacturing strategy leaves questions unanswered.
Intel’s struggles deepen as margins shrink and internal conflicts emerge
Intel is facing a confluence of challenges that are impacting its financial performance and raising questions about its future strategy. Despite launching new CPU lines and ramping up internal manufacturing, the company is grappling with intense pricing pressure, competitive threats, and even internal disagreements.
Margin pressure intensifies
Intel’s first-quarter results revealed a gross margin of 43.6%, falling short of analyst expectations. This decline is attributed to several factors, including a challenging macroeconomic environment and aggressive pricing from competitors. In the client segment, demand remains soft, and Intel is forced to offer discounts
in a segment where pricing pressure is already intense.
For now, Intel is offering two parallel client CPU lines – made internally and externally -neither of which fully satisfies the needs for both performance leadership and profitability.
In the data centre, Intel has finally ramped its Xeon 6 family – consisting of Xeon 6000P-series ‘Granite Rapids’ with high-performance cores and Xeon 6000E-series ‘Sierra Forest’ with energy-efficient small cores. Both are manufactured internally, which should, in theory, help with margins. However,the data center and AI (DCAI) group faces unprecedented competitive pressure from AMD’s EPYC lineup and,to some degree,Arm-based solutions,which forces Intel to provide deep discounts at the cost of its margins.
Internal clashes
As if usual challenges with process technology development and competitiveness of product mix were not enough, Intel apparently has internal clashes on the board-of-directors level.## Intel CEO Lip-Bu Tan Faces Mounting pressure
Intel is navigating a period of significant turmoil, with CEO Lip-Bu Tan facing challenges on multiple fronts. These include internal disagreements over strategy, failed acquisition attempts, and now, public criticism from a former U.S. President.
Recent reports from the Wall Street Journal detail how Tan’s proposals have met resistance from within Intel’s board. These included aspiring plans to secure significant funding from Wall Street to bolster Intel’s manufacturing capabilities and to acquire a company specializing in AI accelerators. However, protracted debates over these initiatives reportedly allowed a competitor to gain ground in the pursuit of the AI target, ultimately hindering Intel’s progress.
Further complicating matters, a proposed collaboration with TSMC – involving a potential takeover of Intel’s manufacturing facilities – proved unfeasible. TSMC showed limited interest, as Intel’s fabs are optimized for high-volume CPU production using different process technologies. Converting these facilities to TSMC’s standards would not have been financially viable. Despite these limitations, the idea reportedly became a source of contention among intel’s leadership.
Adding to the pressure, former U.S. President Donald Trump publicly called for Tan’s resignation last week.The call stemmed from concerns regarding potential conflicts of interest related to Tan’s financial investments in Chinese technology companies, some of which have ties to the chinese military.
[Image of lip-Bu Tan, chief executive of intel]