Intel Foundry 2027 Breakeven Target Becomes More Realistic Thanks to 18A, 14A, and Unexpected Advanced Packaging Growth
At the recent Morgan Stanley conference, Intel’s Chief Financial Officer, David Zinsner, conveyed a sense of optimism regarding the company’s foundry division. His insights indicate that Intel is moving closer to achieving breakeven in this sector, showcasing newfound confidence that could reshape its market presence.
Intel’s 18A-P & 14A: Promising Solutions for External Clients and Revenue Prospects
Under the leadership of CEO Lip-Bu Tan, Intel is tapping into the foundry market at a pivotal moment, largely driven by the growing demand for AI technologies. A notable milestone in this journey has been the successful launch of the Panther Lake architecture. Zinsner noted that the 18A process has met expectations, with yield rates consistently improving as production progresses. He also mentioned the anticipation of customer commitments for the 18A series, particularly the 18A-P variant, which is reportedly garnering interest from industry giants like Apple and NVIDIA.
Panther Lake as a part has been well received, obviously, particularly around battery life in particular. We have more demand than we have supply on Panther Lake.
So that would also help a lot in terms of margin. Now, obviously, you know, we’re in the really early innings of 18A ramping in the fab. But as we progress through this year, certainly as we go into next year, those margins get better and better, which will also help.
Intel’s Panther Lake die shot | Image Credits: Intel
While it was previously believed that Intel might focus on the 14A process for external clients, Zinsner highlighted growing interest in the 18A-P. This development suggests that external commitments could be realized sooner than anticipated. The 18A-P process enables clients to customize their products based on power efficiency, making it an attractive option for major players like Apple, who may integrate it into their M-series system-on-chips (SoCs).
I think he’s now starting to recognize that this is actually a good node to offer to external customers as well. And we’ve been getting some, you know, kind of inbound interest in 18A-P as a foundry node. So that’s great to see that progress.
Another key point from Zinsner’s presentation focused on the production timeline for the 14A process. Recent reports suggested potential delays, with some projections indicating a production start in 2028. However, Zinsner clarified that Intel remains on track with its roadmap, aiming for risk production of 14A by 2027 and full-scale production by 2029. The company is being judicious in how it invests in the 14A process, evaluating customer engagements and internal demand before committing significant capital expenditures.
The engagements have been good. So I think we’re cautiously optimistic that this will be a successful. Now, we also have internal demand on 14A.
And the timing has always sort of been risk production 28, volume 29. I know there was some confusion maybe around the call, but that’s still the case. That’s still the case. Now, that’s more a function of what customers want. For our internal demand there, we have the ability to go risk production in 27, which is likely what we’re going to do. So I guess if a customer wanted to do that at the same time frame, we could do that. And risk production can have useful output.
Intel’s 18A wafer | Image Credits: Intel
Intel is also exploring significant opportunities in advanced packaging. Zinsner mentioned expectations for customer commitments that could yield ‘billions’ in revenue, starting as early as the latter half of this fiscal year. Products like Intel’s EMIB and EMIB-T are currently drawing interest from several prominent fabless manufacturers, with ongoing discussions involving Apple, NVIDIA, Qualcomm, and others. Speculation suggests NVIDIA might utilize EMIB for their upcoming Feynman chips, with possible announcements expected at GTC 2026.
So originally when I was thinking about it [packaging business] and talking to investors, I was calibrating everybody to think about these wins in the hundreds of millions versus weaker wins, which would be in the billions. That’s the way you should think about it. And I’ve since revised that because we’re actually at the close to closing some deals that are in the billions of dollars per year in terms of revenue on packaging.
With promising developments surrounding their wafer and packaging strategies, Intel is now optimistic about reaching breakeven for operating revenue by 2027, contingent on turning customer interest into actual orders. Although gross margins within Intel Foundry have faced pressures over the past quarters, improvements in yield rates and rising demand for mature nodes should set the stage for a recovery for Team Blue’s foundry operations.
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