News Intel might cancel 14A process node development and the following nodes if it can't win a major external customer — move would cede leading-edge ma...

[rluker5]

This is a 10-Q filing. Every company writes down every possible risk to avoid getting sued later on that they didn't disclose a risk they were aware of.

This section is not written by management nor bean-counters nor even the CEO. This "Risk Factors" is written by lawyers. It's likely someone, somewhere at Intel admitted to a Intel's in-house counsel, "Financially, without external customers, Intel Foundry can't invest after 14A because Intel will not have enough money for 10A or 7A after 14A's R&D costs."

And Intel's lawyer likely replied, "Well, if that is so, I am required by law to admit that as a risk factor in the 10-Q."

External foundries must generate profits to build future fabs.

How else can Intel run the Foundry? Who is going to keep throwing money at Intel? Just look at its stock: the market has not believed in Intel's profit-making abilities for two years already.

This isn't like Intel 22nm or 14nm, where Intel's own products are so popular & so profitable, the entire Foundry is sustained off CPU sales. That is completely impossible at 18A / 14A because of how damn expensive the R&D and equipment and labor and fabs are.

^^ This is what many are missing. Intel needed external customers to continue its Foundry.

No foundry on Earth can ever ship a ~1nm node without massive customer contracts. Nobody has that much money "lying around".

//

That this risk factor is new this quarter implies Intel is admitting it vastly overspent on fabs that still have no customers. Do we get that? Imagine TSMC building fabs that nobody was using. People would think TSMC is putting themselves at unbelievbable risk.

It's already too late for 18A to recoup the costs because external customers never showed up.
To think about it with random numbers:.

18A internal: 1 fab = cost $10 billion, revenue of $12 billion
18A external: 3 fabs = cost $30 billion, revenue of $0

$2 billion in profit is not enough to build another fab.
$2 billion in profit is not enough to develop 14A.
$2 billion in profit is not enough to sustain the Foundry.

These are made-up numbers, but this is the calculus (see below for the real numbers).

How can Intel keep going like this? Fabs aren't a one-time cost: think labor, maintenance, raw materials, utilities (power, water), and God forbid, retooling for the next node.

//

Intel must find external customers and quickly. It just hasn't happened yet and Intel did not save enough to go on this fab spending spree without ever even filling up one fab with external customers.

I'm not sure if people truly get how precarious Intel's financial position is, per the 10-Q:

• Intel has $51 billion in debt.
• Intel has $9 billion in cash on hand.
• Intel is losing $2 to 3 billion per quarter.
• Intel has $109 billion worth of plants & property—with zero external customers.

Intel needed to have a $100 billion piggy bank to go wild on new fabs; it does not. It wasted hundreds of billions on stock buybacks, dividends, and fabs that never needed to be built.

Intel needed to fill 18A fabs to the brim to put that money towards 14A, 10A, and 7A. Intel will need to use 18A for the next 5-10 years, just like TSMC, just to recoup the cost of 18A, much less fund future nodes.

^^ this is why Gelsinger said "We bet the company on 18A."

I think you may have been carried away by how much 18A capacity you think Intel has. This is another piece of the Tan puzzle that came out a couple weeks ago: https://www.tomshardware.com/tech-i...ith-no-rival-intel-reportedly-to-focus-on-14a that seems to indicate that there isn't a ton of unused 18A capacity. Although the research costs still apply the same.
There are still 3 customers for 18A as well: MS, Amazon and the US gov and Intel is still a big enough customer that their business alone pretty much puts their fabs at the #2 producer spot.

Other than that I can't disagree.

 

[redgarl]

Intel packaged arrow lake themselves although they where chiplet based and made by tsmc....

I hate arguing with people that are delusional. I stated that Intel packaging was inferior in every way and requires special design. Not to mention 3D stacking is not even an option for mass production. Foveros and Pontevechio were nothing but proof of concepts.

From Jensen himself:

"This is a very advanced packaging technology. I'm sorry we don't have any other choice at the moment," and pointed out that TSMC is still the only partner."

- Taiwan Economic Daily

NVIDIA's CEO Claims That They Have No Option Other Than TSMC For Chips, Rules Out Partnership With Intel & Samsung Foundry In The US

NVIDIA's CEO Jensen Huang has reaffirmed the company's commitment to TSMC, claiming that Team Green has no other "suitable" alternatives.

wccftech.com

Not to mention this...

TSMC Outlines Roadmap for Wafer-Scale Packaging and Bigger AI Packages​

 

[KraakBal]

Rip bozo

 

[ikjadoon]

I think you may have been carried away by how much 18A capacity you think Intel has. This is another piece of the Tan puzzle that came out a couple weeks ago: https://www.tomshardware.com/tech-i...ith-no-rival-intel-reportedly-to-focus-on-14a that seems to indicate that there isn't a ton of unused 18A capacity. Although the research costs still apply the same.
There are still 3 customers for 18A as well: MS, Amazon and the US gov and Intel is still a big enough customer that their business alone pretty much puts their fabs at the #2 producer spot.

Other than that I can't disagree.

That is fair; I don't mean 18A fabs are literally empty , but all the capex that Intel put into fabs designed for 18A and yet zero major external customers.

Intel annual capital expenditures:

Pre-Gelsinger average is roughly $15.3B / year. Using that as 100%:

2018-2020 avg: $15.3 B / yr - 100%
2021: $20.3B - 133%
2022: $24.8B - 162%
2023: $25.8B - 169%
2024: $23.9B - 156%

This was an excesss $30 billion that Intel has not only made next to no profit, but also didn't land even one significant customer.

Intel confirms significant capex went for 18A / 18A-P, but does not break it down (how much for 4 / 3, which also needed some capex):

We had over $100 billion of property, plant, and equipment, net on our balance sheet as of June 28, 2025, the substantial majority of which we estimate relate to our foundry business. While the significant majority of this relates to our existing and in-development nodes, including Intel 18A and Intel 18A-P, with each transition to a new node we continue to utilize some R&D and manufacturing assets from prior nodes.

I don't think Intel will generate $30b in profits on internal 18A products to offset this expenditure—for many years, if not a decade.

MS, Amazon, US Gov: unfortunately, Intel also confirmed all of these are insigificant contracts in the same 10-Q:

We have been unsuccessful to date in attracting significant customers to our external foundry business.

The 10-Q is dated July 24, 2025, so it is the latest update.

//

My overall point, as you note: Intel is not in a financial position anymore to keep building expensive new fabs tooled for expensive new nodes ad infinitum without confirmed customers.

 

[ikjadoon]

The only way I can see this turning around for Intel (as a manufacturing company) is if this is a bid to get the US government to bail them out in a big way. But I don't think even that would work, as the problems appear to be systemic with Intel's foundry side. Basically, the government would have to agree to pour tens of billions per year into the problem to keep leading edge manufacturing by Intel in the US. It would be shocking to actually see that happen — whether you think it's a good idea or bad, I just can imagine there will be enough consensus among the various political factions to make that happen over the long term.

Mind you, I personally think putting $50 billion per year into leading edge silicon manufacturing in the US would be a far better way to spend tax dollars than much of what seems to happen. I just don't believe you'd ever get legislation to make such a move happen that wouldn't end up with a ton of bloat, pork fat, etc. Politicians just can't help themselves

Two perhaps more palatable ideas have been suggested by Stratecherry. First, with the reality:

To summarize, there is no market-based reason for Intel Foundry to exist ….

[Step 1: spin of Foundry; let it be run independently: even as Lip Bu Tan said, nobody wants to fab at their competitor's fab]

the best idea at this point is a new company that has the expertise and starting position of Intel Foundry. Critically, though, it shouldn’t be at all beholden to x86 chips, have hundreds of thousands of employees, or the cultural overhang of having once led the computing world.

[Step 2: force the fed gov't to do purchase gurantees, not subsidies]

That is why a federal subsidy program should operate as a purchase guarantee: the U.S. will buy A amount of U.S.-produced 5nm processors for B price; C amount of U.S. produced 3nm processors for D price; E amount of U.S. produced 2nm processors for F price; etc. This will not only give the new Intel manufacturing spin-off something to strive for, but also incentivize other companies to invest; …

[Conclusion]

And, if the U.S. is going to pay up, that means giving that foundry the best possible chance to stand on its own two feet in the long run. That means actually earning business from Apple, Nvidia, AMD, and yes, even the fabless Intel company that will remain. The tech world has moved on from Intel; the only chance for U.S. leading edge manufacturing is to do the same.

 

[phead128]

Kudos to Gina Raimondo and Biden admin to have the foresight to implement milestone based payments for CHIPS ACT, to avoid corporate giveaway and burning taxpayer cash.

As predicted, Intel takes free taxpayer grants with humongous layoffs, prolonged fab delays, cancelled nodes, delays in promises, outsourcing to foreign rivals, which is why milestone payments are so important. CHIPS ACT also diversified by including TSMC and Samsung, just in case Intel face plants. Good foresight there.

 

[phead128]

If you don't build factories unless you are sure of demand, you are already out of the game.
You need to lead and technological leadership creates demand. If you wait for the orders before building factories, you will get no orders, because the competition already took those orders.

Intel could have retooled existing fabs that already have EUV machines for low run 18A to ensure yields before committing to huge fab expansion. Instead, Gelsinger's unlimited budget approach put the cart before the horse, and now these fabs expansion plans are just hold because they overcommitted to "5 nodes in 4 years" ridiculous schedule which has crippled IFS foundry. Yea, if you cancel half the nodes and outsources the rest, you technically did achieve 5N4Ys.

 

[TerryLaze]

I don't think Intel will generate $30b in profits on internal 18A products to offset this expenditure—for many years, if not a decade.

Since you are capable of looking up numbers look up how much gross profit intel made last year, under the worst conditions meaning paying for building fabs and also paying tsmc to make their chips.
Now imagine that intel is done building fabs uncontrollably and only makes as many as they need and also don't have to overpay for production by paying an outside fab.

If the coming years are as bad as last year it's gonna take two years, if their new gen is a hit it's gonna be one year.

And yes, the thing to look at is gross profit because beyond that we go back to investing into future products. If intel uses all of that money on r&d and building fabs and whatever else, they might still have a negative net income.

 

[shady28]

Intel could have retooled existing fabs that already have EUV machines for low run 18A to ensure yields before committing to huge fab expansion. Instead, Gelsinger's unlimited budget approach put the cart before the horse, and now these fabs expansion plans are just hold because they overcommitted to "5 nodes in 4 years" ridiculous schedule which has crippled IFS foundry. Yea, if you cancel half the nodes and outsources the rest, you technically did achieve 5N4Ys.

I think Intel has done the right thing shooting for 18A. There is a big difference between 18A (and TSMCs N2) vs prior node 'leaps' like N5 and N3. They also appear to have fixed something with their SRAM density on 18A, that they couldn't or didn't fix on prior nodes.

Big thing people fail to note when comparing Intel to TSMC nodes is that there are different libraries, and Intel tends to rule the HP (High Performance) library. TSMC has ruled the HD (High Density) side that attracts foundry business.

For example, Intel 7 HP density is actually very close to TSMC N5 HP library density.

The HP libraries are important for servers, GPUs, and high end desktop/workstation.

On prior nodes TSMC has also had an significant advantage in SRAM density, but that should be (mostly) gone with 18A.

i.e.

Logic Density (HP Library):

• Intel 18A: ~180 MTr/mm². Uses RibbonFET GAA transistors and PowerVia BSPDN, achieving ~30% density improvement over Intel 3 (~124 MTr/mm²).
• TSMC N2: ~130 MTr/mm². Uses nanosheet GAA transistors, offering ~1.05x density scaling over N3E (~124 MTr/mm²).

Logic Density (HD Library):

• Intel 18A: ~238 MTr/mm². Leverages RibbonFET GAA transistors and PowerVia BSPDN, achieving ~30% density improvement over Intel 3 (~200–250 MTr/mm², estimated).
• TSMC N2: ~260 MTr/mm². Uses nanosheet GAA transistors, offering ~1.2x density scaling over N3E (~215 MTr/mm²).

 

[purposelycryptic]

The writing was on the wall with the valuation collapse and it became pretty much inevitable the second they forced Gelsinger out. The supposed investors don't want to build a company's future if it interferes with making money now.

While bad leadership certainly caused the situation that Intel found themselves in this is at best equally bad. The fabs will likely be sold off and we'll have another GloFo except I suspect there will be a lot more job losses because it would cost money to convert DUV fabs to be usable.

As an Intel shareholder, I can tell you it is not making ANY money for me now, nor has it in some time.

 

[rluker5]

That is fair; I don't mean 18A fabs are literally empty , but all the capex that Intel put into fabs designed for 18A and yet zero major external customers.

Intel annual capital expenditures:

Pre-Gelsinger average is roughly $15.3B / year. Using that as 100%:

2018-2020 avg: $15.3 B / yr - 100%
2021: $20.3B - 133%
2022: $24.8B - 162%
2023: $25.8B - 169%
2024: $23.9B - 156%

This was an excesss $30 billion that Intel has not only made next to no profit, but also didn't land even one significant customer.

Intel confirms significant capex went for 18A / 18A-P, but does not break it down (how much for 4 / 3, which also needed some capex):



I don't think Intel will generate $30b in profits on internal 18A products to offset this expenditure—for many years, if not a decade.

MS, Amazon, US Gov: unfortunately, Intel also confirmed all of these are insigificant contracts in the same 10-Q:



The 10-Q is dated July 24, 2025, so it is the latest update.

//

My overall point, as you note: Intel is not in a financial position anymore to keep building expensive new fabs tooled for expensive new nodes ad infinitum without confirmed customers.

You present some good data.
I think Tan is making it clear they are pulling back on the capital expenditures.
Hopefully not back to the pre Gelsinger 2020 Skylake 14+++ levels, but somewhere in between would be healthy. Maybe just a few extra billion a year instead of 8.4.
Pre Gelsinger capex spending levels got them in a mess and they fell behind in manufacturing. Since then they have caught up fast. They probably could slow down a bit if 14a leads. 18a looks competitive with the latest the rest of the world has.