Intel’s Foundry Ambitions Face Setback as Nvidia Withdraws

Intel US4581401001

Intel's efforts to reclaim its position in advanced semiconductor manufacturing have encountered a significant obstacle. Reports indicate that Nvidia, the dominant force in AI chips, has halted testing of Intel's cutting-edge 18A manufacturing node. This development deals a blow to a cornerstone of Intel's foundry strategy, which is central to CEO Lip-Bu Tan's plan for competing with industry leader TSMC. The market reaction was swift, with Intel's stock declining.

Following the news, Intel's share price fell between 1.5% and 5%, bringing it to a trading range around $36. This places the equity well below its 52-week high of $44.02. Investors are interpreting Nvidia's decision to suspend trials as a sign that the technical yield or performance capabilities of the 18A process may not yet meet the stringent demands of leading AI chip designers. The loss of Nvidia as a potential marquee customer for this key node represents a near-term challenge for Intel's foundry division.

The 18A manufacturing technology is viewed as a critical component in Intel's roadmap to regain ground against TSMC. Its success is pivotal for attracting external clients to Intel Foundry Services.

Leadership Maintains Long-Term Focus

Despite this setback, CEO Lip-Bu Tan remains committed to the company's strategic direction. Under his leadership, Intel's stock has appreciated approximately 79% since the start of the year. Tan has labeled 2025 a "pivotal year" for the company. An Intel spokesperson emphasized that the 18A node is making "good progress" and pointed to robust customer interest in the subsequent generation, known as the 14A process.

The management team is relying on a multi-faceted approach to drive the turnaround:

• Government Support: Continued backing from the U.S. government aimed at securing domestic chip production capabilities.
• Next-Generation Technology: A strategic focus on the future 14A process to attract major customers.
• Ongoing Restructuring: Previous restructuring efforts are credited with contributing to the stock's strong performance year-to-date.

The Road Ahead for Intel

Analysts note that while the long-term turnaround narrative—supported by government contracts and the leadership change—remains intact, the absence of Nvidia removes a key short-term growth catalyst. The immediate question is whether other major technology firms will step in to utilize the manufacturing capacity Nvidia has vacated.

Looking further ahead, the first half of 2026 will be a crucial period. It should reveal whether the 14A process can successfully attract the large-scale customers Intel hopes for, or if further delays will emerge within the foundry business segment.