18A Process Can Boost Intel Stock

Intel's Foundry Business and 18A Process - Intel's foundry business faces a critical moment in 2025 as it aims to commercialize its 18A process, which is seen as a make-or-break semiconductor fabrication process [1] - Intel has invested heavily in its foundry operations, with capex reaching $25 billion annually in 2022 and 2023, up from $16 billion in 2019 [1] - The foundry business reported an operating loss of $7 billion on sales of $18.9 billion in 2023, with revenues expected to contract further in 2024 [1] - The 18A process is Intel's most advanced manufacturing technology, featuring a 1.8-nanometer node size, RibbonFET gate-all-around transistors, and PowerVia backside power delivery, which could give it a competitive edge over TSMC's N2 process [2] - Intel has reached critical milestones with the 18A process, with chips powering on, booting operating systems, and being operational within the company [3] - External customers are expected to tape out their first 18A designs in 2025, with enterprise-scale production to follow [3] Customer and Market Potential - Intel has secured significant contracts with the U.S. Department of Defense, Amazon, and Microsoft, which are designing custom chips, including AI accelerators [5] - The potential re-election of Donald Trump as U.S. president could indirectly benefit Intel by boosting domestic manufacturing and potentially imposing tariffs on foreign chip production [6] - Intel's domestic fabrication footprint could position it favorably compared to fabless rivals like AMD and Nvidia, which rely on TSMC for production [6] Financial Performance and Stock Valuation - Intel's stock has seen a 60% decline over the last 12 months, trading at around $20 per share, or just over 20x consensus 2025 earnings [7] - The company's stock has been more volatile than the S&P 500, with lackluster growth in recent years [7] - If Intel successfully executes its 18A transition, it could shift the narrative around the company and drive the stock higher, with a valuation of around $27 per share [7] Competitive Landscape and Industry Standards - Intel's 18A process shows a defect density of 0.4 defects per square centimeter, slightly worse than TSMC's benchmarks of 0.33 defects on its N7 and N5 nodes at comparable stages of development [4] - Despite rumors of Broadcom's disappointment with 18A yields, Intel's defect density is within industry standards for advanced nodes, suggesting adequate yields for production [4]