Intel is pivoting its foundry strategy after its much-touted 18A manufacturing process failed to attract key external customers. The decision, reported by german outlet ComputerBase, forces the company to focus on its next-generation 14A node to win chip-making contracts.
This marks a significant setback for the Santa Clara-based chip giant. It comes amid a sweeping overhaul by new CEO Lip-Bu Tan, who took charge in March. Tan is battling to reverse an $18.8 billion loss from 2024 by cutting jobs and flattening a slow-moving corporate structure.
The goal is to regain manufacturing leadership and compete with rivals like TSMC, which has denied any plans for a joint venture with Intel.
A Foundry’s False Start
The failure of the 18A process is a major blow to Intel’s turnaround plan. The node was positioned as a generational leap, intended to help Intel reclaim the process leadership it lost to TSMC. It features next-gen RibbonFET transistors and PowerVia backside power delivery, innovations meant to be the cornerstone of Intel Foundry Services (IFS) and a clear signal of its return to the cutting edge.
Instead, with external customers largely shunning the process, Intel itself will be the only relevant client for 18A. This forces a strategic pivot to the 14A process, which won’t be ready for mass production until late 2027 at the earliest.
This delay raises serious questions about Intel’s execution. The company now faces a potential multi-billion dollar write-off on its 18A investments, a painful consequence that could directly impact shareholder value and future R&D budgets.
This manufacturing stumble is compounded by other operational issues. Intel’s ambitious $28 billion factory project in Ohio has been delayed until at least 2030, casting further doubt on its ability to deliver on its promises and reclaim domestic semiconductor leadership.
A New CEO’s Sweeping Overhaul
The crisis has prompted drastic action from CEO Lip-Bu Tan. In April 2025, he initiated a broad corporate reorganization to tackle deep-seated issues. In an internal memo, Tan was direct about the need for change, stating, “It’s clear to me that organizational complexity and bureaucratic processes have been slowly suffocating the culture of innovation we need to win.”
The overhaul includes significant but unspecified workforce reductions that began in Q2 2025. The move followed earlier reports that cuts could exceed 20% of staff. This is on top of a previous round of 15,000 job cuts announced back in August 2024.
These cuts are a direct component of a broader cost-saving initiative. To enforce financial discipline, the company is reducing its 2025 operating expense target by $500 million and has lowered its capital expenditure forecast by $2 billion.
Tan flattened the organization, placing the data center/AI and PC chip groups under his direct oversight to accelerate decision-making. In his communication to staff, he was clear about his management philosophy, stating, “I’m a big believer in the philosophy that the best leaders get the most done with the fewest people.”
To sharpen the company’s AI strategy, Tan appointed Sachin Katti to the combined role of Chief Technology Officer and Chief AI Officer. This consolidates leadership as Intel struggles to compete with Nvidia’s dominance in the AI chip market. The move followed the March retirement of tech chief Ann Kelleher.
Financial Fire and Competitive Pressure
The restructuring is driven by severe financial strain. Intel reported a staggering $18.8 billion net loss for 2024, its first annual deficit since 1986, a figure that shocked investors and underscored the depth of its challenges. The foundry division was a major contributor to those losses.
The pressure is not just internal. In a clear sign of the competitive landscape, rival TSMC’s CEO C.C. Wei explicitly shut down any speculation of a partnership on April 17, stating, “TSMC is not engaged in any discussion with other companies regarding any joint venture, technology licensing or technology.” This public denial leaves Intel to navigate its path forward alone, without a lifeline from its chief competitor.
This reality has forced a major shift in Intel’s internal mindset. Michelle Johnston Holthaus, Intel’s Chief Executive of Products, signaled that the company is no longer committed to using only its own factories. For future products like Nova Lake, she said, “Yes. Of course, I want it to be on an Intel Foundry, but if it doesn’t deliver the best product, I’m not going to build it there.”
This admission is a radical departure from Intel’s historical identity as a vertically integrated powerhouse. It underscores the immense challenge ahead. With the 18A process abandoned by external clients and the 14A node years away, Tan’s overhaul is a high-stakes bet on creating what he calls “The New Intel”. Success depends on finally executing on its ambitious plans.
