Is Intel finally closing the foundry gap with TSMC? A realistic look at 18A, margin drag, and client wins

Intel Corporation is attempting one of the most difficult feats in modern semiconductor history: transforming itself from an integrated device manufacturer into a globally competitive foundry capable of challenging Taiwan Semiconductor Manufacturing Company Limited. With its 18A process node now in production, government funding secured, and early client traction building, the question confronting analysts and investors is no longer whether Intel Corporation is serious about its foundry ambitions, but whether it can realistically close the gap with Taiwan Semiconductor Manufacturing Company Limited in technology, yield, scale, and profitability.

The third quarter of 2025 marked another milestone for Intel Corporation’s broader transformation under Chief Executive Officer Lip‑Bu Tan. While the company’s earnings outperformed expectations, the foundry story dominated institutional attention. Investors and policymakers alike see Intel Foundry Services not just as a business unit, but as a strategic test case for whether advanced semiconductor manufacturing can be successfully reshored to the United States.

How far has the Intel 18A process advanced in 2025 and can it finally rival TSMC’s N3/N2 nodes?

The Intel 18A process node represents the most aggressive technological leap in the company’s history. It introduces RibbonFET gate‑all‑around transistors combined with PowerVia backside power delivery to deliver higher transistor performance and energy efficiency. Intel Corporation claims that 18A delivers roughly fifteen percent better performance per watt and thirty percent higher density than the earlier Intel 3 node. Production has already commenced at Fab 52 in Chandler, Arizona, positioning it as the first advanced node manufactured at scale within the United States.

Yet despite this achievement, Intel Corporation remains several cycles behind Taiwan Semiconductor Manufacturing Company Limited in manufacturing maturity and customer confidence. The latter’s N3 process is already in volume production, while its upcoming N2 node is slated for rollout in 2026 with comparable gate‑all‑around architecture. Intel Corporation’s challenge lies in ramping 18A yields to competitive levels and proving long‑term reliability. While the company is demonstrating measurable progress, the foundry ecosystem continues to view Intel as a promising but still unproven alternative to Taiwan Semiconductor Manufacturing Company Limited’s established dominance.

What does customer testing activity on Intel 18A reveal about foundry credibility and client trust?

Intel Corporation’s most significant credibility boost has come from the announcement that several major technology firms are testing chips on its 18A process node. NVIDIA Corporation, Broadcom Inc., and other unnamed hyperscale customers are reportedly running test wafers through Intel’s new process technology. The first internal product using 18A, the Panther Lake client processor, is on track for release later this year and will serve as the company’s reference product to showcase the node’s capabilities.

However, testing and full production are fundamentally different milestones. While early engagements validate Intel Foundry Services’ technical readiness, they do not yet translate to sustained revenue or long‑term design wins. Taiwan Semiconductor Manufacturing Company Limited enjoys decades‑long relationships with global chipmakers and retains their trust through consistent yields, predictable schedules, and cost efficiency. Intel Corporation’s challenge is to convert curiosity into contracts and pilot runs into meaningful external wafer volume.

The next eighteen months will determine whether these initial collaborations evolve into formal multi‑year production agreements. For Intel Foundry Services, customer adoption will be the clearest indicator that the company’s “open foundry” model is gaining traction beyond its internal product divisions.

Is Intel’s foundry segment still dragging down margins or showing signs of structural profitability?

Financially, Intel Foundry Services continues to weigh on the company’s broader profit profile. In the third quarter of 2025, Intel Corporation posted non‑GAAP gross margins of forty percent and non‑GAAP earnings per share of twenty‑three cents, exceeding guidance and marking a sequential improvement. Yet beneath these headline numbers, the foundry segment remains loss‑making.

The economics of scaling an advanced node are inherently capital‑intensive. Each new fabrication process requires immense investment in cleanrooms, photolithography tools, and validation infrastructure before even the first profitable wafer is produced. The cost to bring Intel 18A to market is immense, and utilization levels remain too low to offset depreciation. That dynamic creates structural margin drag at a time when Intel Corporation is still rebuilding investor confidence in its balance sheet.

Management has acknowledged that the path to profitability within Intel Foundry Services will be gradual. The segment must achieve higher utilization rates, attract a greater mix of external customers, and optimize design enablement costs before its contribution turns positive. While short‑term pressure on margins is expected, leadership maintains that long‑term scale and recurring foundry revenue will eventually deliver sustainable returns.

How is U.S. policy backing through the CHIPS Act helping Intel compete with Taiwan’s TSMC?

Intel Corporation’s foundry transformation is intertwined with U.S. industrial policy. The company’s $20 billion investment in Arizona’s Fab 52 and Fab 62 has been supported by multi‑billion‑dollar grants and incentives under the CHIPS and Science Act. This government partnership reflects Washington’s strategic goal to reduce dependency on overseas manufacturing, particularly in light of geopolitical tensions across the Taiwan Strait.

Intel Corporation has positioned itself as a key player in the American semiconductor resurgence. Producing 18A wafers domestically gives it a unique selling point among clients concerned about geopolitical risk, export controls, and supply‑chain resilience. The company’s foundry division is already aligned with defense‑grade production programs such as the Secure Enclave initiative, further embedding it within national industrial priorities.

Still, policy support cannot compensate for operational inefficiencies. To win long‑term customer loyalty, Intel Foundry Services must demonstrate cost competitiveness and deliver wafers on time with consistent yields. Subsidies can provide momentum, but only execution can secure market share from Taiwan Semiconductor Manufacturing Company Limited.

What do analysts say about Intel’s odds of becoming a viable alternative to Taiwan’s foundry giant?

Investor sentiment toward Intel Corporation’s foundry story is cautiously optimistic but far from euphoric. Analysts widely agree that 2025 represents a turning point. The technology stack is improving, the leadership team is executing with greater discipline, and external interest in the 18A process is genuine. At the same time, few expect Intel Corporation to challenge Taiwan Semiconductor Manufacturing Company Limited’s volume leadership within this decade.

Several equity research firms have noted that Intel Foundry Services must sign at least one major “hero” customer by late 2026 to maintain strategic credibility. Without such a flagship client, its long‑term economics may come under renewed scrutiny. Others have warned that Intel 14A, the node succeeding 18A, could face delays if resource allocation is spread too thinly between process development and customer acquisition.

For investors, the central question is whether Intel Corporation can move beyond aspirational rhetoric and deliver tangible, recurring foundry revenue. Until it can demonstrate both technology leadership and economic viability, Intel Foundry Services will remain a story of potential rather than performance.

What could determine whether Intel Foundry Services succeeds or stagnates by the end of 2026?

Intel Corporation’s ability to close the foundry gap hinges on three interconnected factors: yield maturity, external design wins, and margin recovery. Yield determines competitiveness, design wins determine scale, and margin determines sustainability. Success across all three will be required to shift market perception and justify the capital invested in the foundry build‑out.

The upcoming 18A ramp is critical not only for internal product launches but also for signaling readiness to external clients. If Intel Corporation can demonstrate high‑yield wafer production for Panther Lake and subsequent products, it will have a stronger foundation to negotiate multi‑year foundry contracts. Conversely, any slippage in yield targets or production schedules could undermine customer confidence at a fragile stage in the company’s recovery.

On the financial side, Intel Foundry Services must reduce capital intensity per wafer by improving utilization rates and diversifying its customer portfolio. Cost control will remain the deciding factor in whether the business transitions from a drag to a driver of group‑wide earnings by 2027.

Can Intel Corporation turn its foundry promises into proven production results before investors lose patience?

From a strategic and technological standpoint, Intel Corporation possesses the essential building blocks to challenge the existing foundry order. Its 18A node integrates two major process breakthroughs, its domestic footprint aligns with geopolitical demand for supply‑chain diversification, and its executive leadership is embedding a culture of engineering‑first discipline across the organization.

However, Taiwan Semiconductor Manufacturing Company Limited’s advantages are entrenched. The company operates at unmatched scale, benefits from decades of yield optimization, and has a proven reputation for meeting client commitments. Intel Corporation must prove that it can deliver wafers not only of high technical quality but also at competitive cost and volume.

Execution will be the determining factor. If Intel Foundry Services can achieve external design wins, sustain yield improvements, and improve utilization across its fabs, then by 2027 the company may well have narrowed the foundry gap meaningfully. Until those proof points emerge, the market will continue to treat Intel Corporation’s foundry ambitions as credible but unconfirmed.

What are the key takeaways from Intel’s foundry progress and strategic financial realignment in 2025?

• Intel Corporation reported $3 billion in foundry revenue year-to-date, with 18A now in customer testing and claims of industry-first gate-all-around transistors on track for HVM in 2026.

• While gross margin expanded sequentially to 43.3%, the foundry business remains a margin drag as external customer mix builds slowly.

• Intel Foundry Services added MediaTek and Ericsson as customers during the quarter, but analyst skepticism remains around scale and cadence.

• Advanced packaging was a standout, with capacity expected to double in 2025 amid strong interest from AI and HPC clients.

• Despite ongoing capital intensity, Intel reiterated its free cash flow breakeven goal by 2026 and maintains CHIPS Act subsidy tailwinds.

• Investor attention remains focused on whether Intel’s 18A progress can translate into tangible foundry share gains from Taiwan Semiconductor Manufacturing Company by 2027.