Why Intel's Foundry May Be Set For A Comeback

Core Viewpoint - Intel's stock has seen a significant decline of over 55% this year, trading at approximately $21 per share, primarily due to market share losses in the CPU sector and challenges in its foundry business, despite substantial investments of around $25 billion in the last two years [1] Group 1: Foundry Business and Technological Developments - Intel's foundry business reported a $7 billion operating loss on $18.9 billion in revenue, but a turnaround is anticipated with the upcoming 18A fabrication process technology [1][2] - The 18A process, featuring advanced technologies like RibbonFET and PowerVia, is expected to enhance performance and power efficiency, with a node size of 1.8 nanometers, slightly ahead of TSMC's N2 process [2] - Intel has achieved critical milestones with the 18A process, with expectations for external customers to begin designs in 2025 and large-scale production to follow [3] Group 2: Contracts and Geopolitical Factors - Intel has secured significant contracts, including with the U.S. Department of Defense, which could bolster its foundry business amid increasing demand for domestic chip production [3][5] - The geopolitical landscape may favor Intel, as the emphasis on U.S. manufacturing could lead to regulatory support and potential tariffs on foreign chip production, driving more business to Intel [5][6] Group 3: Market Position and Valuation - Intel's stock is currently trading at less than 1x its book value, indicating that the market is undervaluing its technological capabilities and future potential [10] - Earnings projections show a decline to about $1 per share in 2025, down from nearly $2 in 2022, but a recovery in demand could reverse this trend [10] - The company is considering separating its foundry business into a subsidiary, which could unlock additional value for shareholders [11]