Intel's 18A Node Enters High-Volume Production, But Customer Gap Underscores Foundry Uncertainty

What happened

Intel has commenced high-volume production of its advanced 18A chip node at a new Arizona fab, marking a technical milestone in its aggressive roadmap to catch TSMC. However, no major external customers have yet emerged for the technology, a critical shortfall given the DeepValue report's emphasis on foundry customer traction as key to turnaround viability. Management's claim of having 'turned the corner' contrasts with persistent multi-billion dollar losses in Intel Foundry, which reported $7.8 billion in operating losses year-to-date 2025. The report highlights that Intel's valuation, after an 86% share price surge, embeds optimism without clear evidence of external demand or profitability improvements. This development reinforces the high execution risks and capital intensity noted in filings, where success remains 'highly uncertain.'

Implication

The start of 18A production is a necessary but insufficient step, as external customer adoption is pivotal to driving foundry revenue and reducing the segment's deep losses. Without such clients, Intel Foundry may remain reliant on internal demand, limiting diversification and prolonging financial drag on consolidated results. Investors should monitor upcoming quarterly reports for customer announcements, which could indicate a positive inflection, but historical execution missteps and competitive pressures from TSMC and Samsung heighten uncertainty. The capital-intensive nature of this turnaround, with $50.4 billion in construction-in-progress, means any delays or failures could trigger further impairments and leverage issues. Thus, maintaining a defensive stance or trimming exposure is prudent until tangible evidence of sustainable customer traction and narrowing losses emerges.

Thesis delta

The new information does not shift the core thesis from the DeepValue report, which already flagged customer traction as a critical watch item and deemed Intel a potential sell. The lack of external customers for 18A production confirms ongoing execution risks in the foundry strategy, aligning with prior concerns about high valuation and uncertain profitability. Any positive delta would require concrete evidence of major customer wins and improved financial metrics in future disclosures.