forbes.com, Jun. 05, 2025 –
At Intel’s annual Direct Connect conference, the company’s CEO and foundry leadership team laid out the future of the company’s foundry business. Intel Foundry Services is the chip manufacturing arm of Intel and has been one of the areas of the company that has needed a significant turnaround to enable Intel’s future success. (Note that Intel is a client of my firm, Moor Insights & Strategy.)
One of former CEO Pat Gelsinger’s efforts was the delivery of five production nodes in four years, also known as 5N4Y. This was needed because Intel once had a foundry advantage over companies like TSMC, but eventually — through a series of mistakes, delays and lack of execution — it squandered that lead. Later this year, Intel will begin to deliver chips made on production node 18A to customers; volume shipments will begin early next year. Node 18A is the fifth node in four years, if you’re counting by the timetable that Gelsinger set when he started the turnaround.
Gelsinger left as CEO late last year; he was replaced by former board member Lip-Bu Tan earlier this year, and it seems so far that Tan will continue to execute on Gelsinger’s overall strategy, but seemingly with even more focus — yet fewer employees. While Intel’s headcount and layoff numbers under Tan are not official yet, there is an expectation that he will run the company with a leaner balance sheet and a smaller payroll.
The other upside of Intel delivering 18A is that it will demonstrate Intel’s competitiveness both on a product front with chips like the Panther Lake processor, but also on a foundry front in terms of how that product leverages the new node. While it remains unclear how much 18A capacity Intel has available to serve third-party customers, there are no illusions about Intel’s need to win foundry customers to enable IFS to scale to a point of profitability. After all, chip fabs cost billions of dollars and depreciate extremely quickly, so the only good way to turn a profit is through high utilization and volume. While there is no doubt that Intel will fill a lot of the capacity making its own products, Intel alone will not be able to sustain IFS’s ambitions of growth.