What could a shift in Intel’s foundry strategy bring?

Investing.com -- Intel’s mooted plan to push key foundry work from its coming 18A manufacturing node to a later 14A process would not meaningfully affect earnings over the next two years, Morgan Stanley said, saying expectations for the original programme were already modest.

Intel (NASDAQ: INTC) reportedly is considering shelving most third‑party production on 18A, the final step in former chief executive Pat Gelsinger’s “five nodes in four years” revamp, and instead focusing on 14A risk production in 2026 with volume in 2027.

Morgan Stanley analysts wrote that even in the most optimistic scenario, external customers were likely to start with small pilot projects on 18A, limiting capital spending and any potential writedown.

“Management has always emphasised that the path to breakeven depends only minimally on outside foundry customers,” the note said.

Deferring large‑scale foundry ambitions could, however, push meaningful volume ramps further into the decade and question how aggressively Intel should compete with industry leader Taiwan Semiconductor Manufacturing Co.

The bank remains cautious, saying it is “on the sidelines” until there is clearer progress in Intel’s core processor road map.

The shift may also help management concentrate on stabilising its PC and server businesses, which still command the bulk of revenue.

Morgan Stanley welcomed moves that deprioritise near‑term bets on foundry services and AI accelerators, calling them “less disruptive” to the turnaround effort.

While recognising Intel’s low enterprise‑value‑to‑sales multiple, the broker said investors appear eager for quicker fixes than chief executive Lip‑Bu Tan has suggested are realistic.

“Recapturing value starts with legacy products,” the analysts wrote, adding they remain sceptical that foundry operations will contribute materially to profits within an investable time frame.

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