MW Intel earnings bring more questions than answers, sending the stock lower
By Emily Bary
Analysts think Intel's commentary signaled openness to cutting its foundry business later on, but for now there's uncertainty around the company's future
Intel Corp. hinted that it might be open to a strategic shift down the road, but its stock is sliding 9% Friday as earnings failed to settle the score on major issues dogging the company.
Chief Executive Lip-Bu Tan said on Thursday's earnings call that the company would need "a meaningful external customer," besides itself, to make its next-generation 14A process node work financially. According to Jefferies analyst Blayne Curtis, "this is the first acknowledgment that the days of being an IDM," or integrated device manufacturer, "are likely numbered."
See also: Intel earnings tell two stories, as revenue impresses but losses pile up from restructuring
Wall Street has been wondering what will happen to Intel's IDM business under Tan, who became Intel's CEO in March. Pat Gelsinger, the prior CEO, was trying to turn Intel $(INTC)$ into a foundry for other semiconductor companies once again, but the efforts were bleeding money - hence investor questions on whether Tan would throw in the towel. Admittedly, though, doing so wouldn't be so simple, as it was unclear to analysts who would be interested in buying Intel's foundry assets if the company parted ways with that business.
Melius Research analyst Ben Reitzes said that management's remarks "are not comments that are made by a foundry with customer visibility," and in light of the $3.2 billion operating loss for the foundry business last quarter, Wall Street "will continue to have doubts this division can ever stand on its own."
Seaport Research analyst Jay Goldberg was discouraged by the commentary, saying that it introduced "a whole host of questions." For instance, he wondered if potential customers will be inclined to commit to Intel's 14A process if the company doesn't seem wholly committed to it itself.
Plus, if Intel is going to move away from its foundry strategy, Goldberg asked why the company would delay the move. "Split the company now and dispose of the fabs while they are at peak value," he wrote, referring to chip-fabrication plants.
Intel also previously made the foundry business an independent subsidiary, and there's structural separation between that business and Intel's product business, which is a manufacturing customer of the foundry arm. Goldberg is now asking whether Intel's product business should become "a rational arms-length customer and itself move to TSMC sooner rather than later."
Wedbush's Matt Bryson had questions about the path forward as well, saying he could view the commentary in two ways from a strategic perspective. Either Intel has created "more uncertainty around the future of Intel fab," or management's remarks could be designed to put some pressure on customers to "engage" with Intel due to the risk that the foundry business would go away entirely.
"Regardless the shift in strategy necessarily yields less favorable intermediate- to longer-term assumptions (even if justified) as Intel seemingly positions itself to compete (rather than lead) in process and product development," he wrote.
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-Emily Bary
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July 25, 2025 10:27 ET (14:27 GMT)
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