Intel foundry faces serious challenge after stock price plummets 45% in October

as intel The company is coming off its steepest share price decline since the 1970s due to a worsening outlook for the PC market, but the company faces intense pressure to get its sluggish foundry business back on track.

For Inter, it was an elusive challenge. The company has been trying for six months, spending a significant portion of its $108 billion in capital spending over that period. Taiwan semiconductor manufacturing company. However, the company does not yet have a strong customer for its cutting-edge chips, and instead mainly manufactures chips for its own products.

Wall Street is running out of patience. After the U.S. government acquired a 10% stake in Intel in August 2025, and Nvidia also made a $5 billion investment, the stock price began to soar, ultimately rising sixfold in 10 months and peaking in June. Intel was finally finding its niche in the artificial intelligence boom by providing the central processors used for agent AI, but at the same time it was growing more optimistic about its fab aspirations.

Intel’s story took a dramatic turn for the worse on Thursday, when the company announced that its revenue for the current quarter will be $1 billion to $2 billion less than analysts expected, as the PC market continues to suffer from rising costs for memory and other components. Intel still relies on its PC division for about half of its revenue, and more and more consumers are choosing not to upgrade.

Stocks plunged 29% on Friday, the worst day since the 1970s, capping a 45% plunge in October that was the biggest monthly drop in history, according to FactSet. It fell another 8% in Monday trading.

Intel’s investment in the future should pay off. CEO Lip-Bu Tan predicted that the global market for server processors will expand fivefold to approximately $200 billion over the next five years. Intel’s data center business grew 78% year over year to $7.3 billion in the third quarter.

But Intel said it can’t make enough chips to meet demand, pointing to industry-wide supply constraints for wafers, substrates and memory, and noting that many of the same factors are hurting PC sales.

So Tan is forced to make a difficult choice. In response to the capacity shortage, Intel announced it would shift some of its Oregon factory’s production capacity away from making wafers for its advanced 18A chips and make more wafers on an older node known as Intel 3 used for its data center products.

The resource change could complicate that effort, as Intel hopes 18A will attract outside foundry customers. David Yoffe, a professor at Harvard Business School who has served on Intel’s board for about 30 years, said the latest move is not welcome to the foundry’s future customers.

“They’re concerned that if Intel doesn’t actually have excess capacity beyond their own demand, then they might not be a very reliable supplier,” Yoffe said. If Intel doesn’t find a large foundry customer within a year, “the economic stress on Intel will start to show even more dramatically,” he said.

Intel did not respond to a request for comment.

Intel is best known for its industry-leading central processing units (CPUs). graphics processing unit Nvidia and advanced micro device It dominated the early AI boom because it excels at handling large-scale workloads for model training and chatbot inference. On the other hand, Intel-like CPUs are essential for running virtual machines used by agent apps such as: Metamuse.

Competitors or partners?

Jordan Klein, an analyst at Mizuho Securities, said in an interview that Intel has “more control over its own destiny” than most chipmakers as one of the only companies in the world that can manufacture and package the advanced chips needed for its products.

“If you don’t have enough production capacity, you’re left with no revenue and no money,” Klein says.

Former Intel CEO Pat Gelsinger, who was fired at the end of 2024, spent his four-year tenure at the company aggressively pursuing foundry investments to catch up on 7-nanometer and 10-nanometer technologies, advanced process nodes aimed at putting more transistors on each chip.

Mr Tan is taking a more cautious approach, limiting spending until customer demand is solidified. He said Thursday that “several customers” will be announced within the next two quarters.

Intel’s 18A chips are produced in large quantities in Arizona for its own applications, and a second factory is under construction. The first structural trusses have just been installed at Intel’s new Ohio facility, but the project is nearly five years behind schedule.

Another barrier to attracting new customers, Yoffie said, is that chipmakers are: broadcom and Qualcomm In terms of products, companies may be hesitant to manufacture chips with a company that is a competitor.

“The right solution for Intel is to spin off the foundry business,” Yoffe said, calling it “not only the best solution, but probably the only solution.”

Klein said AMD is probably the only major chipmaker not interested in manufacturing with Intel, since the two companies compete directly in the CPU market. He called it “an issue of competition, secrecy and privacy.”

AMD will report its third quarter results after the bell on Tuesday.

Yoffe said the United States needs Intel to succeed.

“Ultimately, TSMC will only be able to generate 20 to 25 percent of the world’s production capacity in the United States, and that will still take several years,” he said. “If we run out of foundries in the U.S. and run into geopolitical and supply chain issues like we’ve had during COVID-19, that’s going to be bad for the country and for the U.S. semiconductor industry.”

Attention: TSMC can’t make chips for everyone, competition is ‘very fierce’