Lip-Bu Tan, chief executive officer of Intel Corp., attends the company’s event in Tokyo, Japan, on Wednesday, Oct. 7, 2026.
Akio Kon | Bloomberg | Getty Images
As Intel comes off its steepest stock drop since the 1970s due to a worsening outlook for the PC market, the chipmaker is facing intensifying pressure to get its flailing foundry business off the ground.
It’s been an elusive task for Intel. The company 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. But it still has no marquee customer for its most advanced chips, and is primarily manufacturing chips for its own products.
Wall Street is losing patience. After the U.S. government took a 10% stake in Intel in August 2025, and Nvidia followed with a $5 billion investment, the stock started to shoot up, ultimately rising sixfold over 10 months before peaking in June. Intel was finally finding its niche in the artificial intelligence boom, delivering central processors used for agentic AI, while optimism simultaneously grew over its fab aspirations.
Intel’s story took a dramatic turn for the worse on Thursday, when the company said revenue this quarter will be between $1 billion and $2 billion shy of analysts’ estimates as the PC market continues to suffer 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 plummeted 29% on Friday, its worst day since the 1970s, capping off a 45% plunge in October, the steepest monthly drop on record, according to FactSet. It’s down another 8% in Monday trading.
Intel vs. Nasdaq since start of October
Intel’s investments in the future are supposed to be paying off. CEO 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. Intel’s data center business recorded 78% growth in the third quarter from a year earlier to $7.3 billion.
However, Intel said it can’t 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.
That’s forcing Tan to make some hard choices. In response to the capacity shortage, Intel said it’s shifting some Oregon factory capacity away from making wafers for its advanced 18A chips to make make more wafers on an older node, known as Intel 3, which are used for its data center products.
Intel is counting on 18A to attract outside foundry customers, so the shift in resources 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 it doesn’t find a large-scale foundry customer within a year, “then the stress on Intel’s economics are going to start to show even more dramatically,” he said.
Intel didn’t respond to a request for comment.
Intel is best known for its industry-leading central processing units, or CPUs. Graphics processing units from Nvidia and Advanced Micro Devices ruled the early AI boom because they excel at handling large workloads for training models and inference for chatbots, while CPUs like Intel’s are crucial for running the virtual machines used by agentic apps like Meta‘s Muse.
Competitor or partner?
As one of the only companies in the world capable of manufacturing and packaging the advanced chips it needs for its own products, Intel has “more control over their destiny” than most chipmakers, Jordan Klein, an analyst at Mizuho Securities, said in an interview.
“If you don’t have enough capacity, you leave revenue and money on the table,” Klein said.
Former Intel CEO Pat Gelsinger, who was ousted in late 2024, spent his four-year tenure at the company aggressively pursuing foundry investments to catch up after delays on its 7- and 10-nanometer technologies, advanced process nodes that aim to fit more transistors on each chip.
Tan has taken a more cautious approach, limiting spending until customer demand is locked in. He said on Thursday that “a couple customers” would be announced in the coming two quarters.
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 just installed at Intel’s new Ohio facility, although the project is nearly five years behind schedule.
Another roadblock to getting new customers, Yoffie said, is that chipmakers like Broadcom and Qualcomm may hesitate to manufacture chips at a company that’s also a competitor on the product side.
“The right solution is for Intel to spin off the foundry business,” Yoffie said, calling it “not only the best solution, but maybe the only solution.”
Klein said AMD is likely the only major chipmaker that isn’t interested in manufacturing at Intel because the two companies compete directly in the CPU market. He called it a “competitive, secrecy, privacy issue.”
AMD reports third-quarter results after the bell on Tuesday.
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.”
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