Here's the latest sign Intel's turnaround won't be so easy, according to this analyst

Intel shares dropped approximately 4% following reports that the company is considering discontinuing external offerings of its advanced 18A chip manufacturing node. This potential move, despite billions invested in its development, stems from an inability to attract new customers, signaling significant hurdles in Intel's turnaround efforts and potentially benefiting competitors like TSMC.

Analysis

Intel Corp. shares declined approximately 4% following a report that the company is considering halting external customer access to its 18A chip-manufacturing process, a node developed with billions of dollars of investment. This potential strategic pivot is reportedly due to a failure to secure new clients for the advanced process, signaling a significant impediment to the company's turnaround efforts. The report, citing comments from CEO Lip-Bu Tan, underscores the execution challenges facing the strategy initiated by his predecessor, Pat Gelsinger, which was designed to directly compete with foundry market leaders. This development directly benefits rivals, with the article explicitly noting that Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) stands to gain from Intel's struggles, a dynamic reflected in the strongly negative sentiment (-0.8) for INTC versus the positive sentiment (0.2) for TSM.

Key Decisions for Investors

• Investors should treat this news as a material risk to Intel's foundry services growth narrative and monitor for official company clarification on the future of the 18A node for external clients.
• The reported failure to attract customers for a cornerstone technology raises significant concerns about the return on capital for Intel's multi-billion dollar investments, warranting caution for those considering new long positions.
• This situation reinforces the competitive dominance of TSMC, and investors may consider the relative weakness in Intel as a positive catalyst for its primary competitor.