Intel (NASDAQ:INTC) Faces $3.2B Foundry Blowout, Pivots All-In on 18A Survival Strategy

Intel (NASDAQ:INTC) Battles Deep Losses While Betting Everything on 18A Ramp

Foundry Wounds Cut Deep as NASDAQ:INTC Margin Pressure Intensifies

Intel's Q2 numbers offered no sugarcoating. Gross margins collapsed 9% year-over-year, plunging to 29.7%, and non-GAAP EPS cratered to a $0.10 loss—missing Wall Street’s target by $0.11. Revenue barely held at $12.9 billion, flat from the prior year, and supported mostly by Client Computing ($7.9 billion, down 3%) and Data Center & AI (up just 4%). But the real hemorrhaging sits in the foundry division, which pulled in $4.4 billion in Q2 revenue yet lost a staggering $3.2 billion in operating losses. Intel’s bet on becoming a foundry powerhouse has turned into a gaping cash drain.

Intel CEO Reshapes Strategy as Workforce Shrinks and Factories Halt

New CEO Lip-Bu Tan isn’t wasting time. The company has cut its executive ranks in half, plans to slash headcount to 75,000 this year, and has already cancelled major builds in Poland and Germany. Even Ohio’s mega-fab is slowing construction. CapEx is capped at $18 billion in 2025, with further reduction likely in 2026. Intel is clearly exiting its overbuilt footprint, trying to reverse years of overexpansion that left its capacity well ahead of demand.

NASDAQ:INTC Faces High-Stakes Gamble on Intel 18A Launch

All eyes are now on Intel 18A, the node Tan calls “job number one.” Intel claims it has begun 18A production in Arizona, ahead of the Q4 launch of Panther Lake—its first product on the new process. Rumors suggest 18A yields exceed 50%, putting it ahead of Samsung but still trailing TSMC. If true, that gives INTC a narrow path to reclaim relevance in cutting-edge silicon by year-end 2025. But it’s a high-wire act: Intel’s 10-Q now states that future node development will be contingent on confirmed customer commitments. No more blank checks. Without 18A success, Intel has hinted it may abandon 14A altogether.

Panther Lake, AI PC Cycle, and Government Backing Provide Lifelines

Panther Lake isn’t just another chip; it’s the cornerstone of Intel’s fight for survival. Expected by year-end, the SKU targets AI PCs and is central to regaining PC relevance. Simultaneously, government subsidies are helping to keep the lights on—$3 billion for secure enclaves and nearly $8 billion via the CHIPS Act. The U.S. doesn’t want TSMC to be the only game in town. This political tailwind may buy Intel time, but execution must follow.

Operating Model Struggles to Support NASDAQ:INTC Valuation

Valuation remains a paradox. At 28.8x forward P/E, INTC trades richly for a firm bleeding cash. Gross margin guidance for Q3 is 36%, but the company projects breakeven EPS. Shareholders are betting on future profitability, but it’s hard to see near-term catalysts outside of Panther Lake or a dramatic rebound in foundry wins. Intel’s Client Computing still makes up 61% of total revenue, but it declined 3% YoY. PC upgrade hopes tied to AI remain speculative.

Intel Foundry Losses Threaten Long-Term Viability

Q2 foundry losses of over $3 billion continue a brutal trend. Management admits that prior capacity expansions were excessive. Intel is now exploring strategic solutions—potentially including a JV with TSMC—to stop the bleeding. Foundry revenue is barely growing, and without a massive design win in AI or a joint development deal, the losses could keep piling up. Intel has already stated in its filings that it won’t proceed with 14A or future nodes without pre-committed volume. It’s no longer a research-first strategy; it’s survival mode.

Massive Restructuring Charges Cloud Earnings, But Cut Future Costs

Restructuring hit Q2 earnings hard: $1.9 billion in charges, including $0.20/share in EPS damage. Intel is targeting $17 billion in annual operating expenses for 2025 and $16 billion by 2026. If successful, this would bring expenses in line with its new, leaner operating model. But those benefits are back-end loaded—investors should not expect profit stability before mid-2026. 

NASDAQ:INTC Chart Signals Weakness Amid Turnaround Narrative

Track the real-time chart for NASDAQ:INTC here. Shares slid 5% post-earnings, reflecting investor doubt around breakeven guidance and continued foundry losses. Unless 18A volume ramps successfully or a JV deal is announced, momentum may remain subdued.

BUY / SELL / HOLD Verdict: NASDAQ:INTC Is a High-Risk BUY on 18A Execution and Strategic Tailwinds

Intel's transformation is binary—but not priced like one. The 18A node, Panther Lake launch, CHIPS Act subsidies, and the urgent U.S. need for a non-TSMC foundry partner make Intel more than a turnaround—it’s a geopolitical necessity. Yes, current margins are weak and losses deep. But that’s the point: risk is high, yet so is upside optionality. If 18A ramps and Panther Lake hits targets, shares could re-rate quickly. At $12.9B revenue, breakeven EPS, and $3.2B in foundry losses, Intel is a BUY for aggressive investors willing to bet on execution and America’s silicon security strategy.

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