Intel Corporation shares fell 2.85% on Friday as investors looked at new progress in the company’s next-generation 14A chipmaking technology.
Investors are also worried about the large losses still being reported by Intel’s foundry business. The key question for Intel stock is whether the strong 14A technology progress can eventually turn into profitable chip manufacturing.
Intel says its 14A technology is showing strong progress
Intel CFO David Zinsner said the defect density for the company’s 14A process is improving faster than expected. He said 14A defect density was tracking above Intel’s target curve, as noted by TechStock2.
Zinsner also said Intel had not seen similar performance since its 22nm process, according to Tom’s Hardware. This is important because lower defect density can mean that more chips on a wafer work properly.
Intel 14A production plans
Defect density measures the number of imperfections found across a certain area of a chip wafer. When defect density falls faster, manufacturers can potentially get better yields. Better yields mean fewer defective chips, which can help lower the cost of producing each working chip. It can also help Intel use its factories more efficiently. However, defect density is still an early sign of progress and does not automatically mean Intel will achieve profitable mass production.
Intel plans to begin risk production of 14A chips in the second half of 2027. High-volume manufacturing is expected to begin in 2028. This means investors still have to wait before they can see whether the technology works successfully at a large commercial scale.
Intel is also seeing stronger interest from potential customers. Zinsner said discussions with outside customers have moved beyond simply looking at Intel’s technology data. Customers are now asking Intel how much 14A manufacturing capacity it can provide, according to Tom’s Hardware. This suggests that some potential customers are becoming more serious about using Intel’s foundry services.
Intel Foundry losses
The biggest problem for Intel remains the financial performance of its foundry business. Intel Foundry generated $5.77 billion in revenue in the second quarter. However, the business reported a massive $2.09 billion operating loss, according to Intel’s second-quarter results, as noted by TechStock2. So, even with billions of dollars in revenue, Intel’s manufacturing business is still far from profitable.
Also read: Nvidia-Hugging Face deal: Why the reported $13 billion AI acquisition matters
Intel Foundry’s operating loss was $3.17 billion in the same quarter a year earlier. That means the loss has narrowed by more than $1 billion. However, the latest loss was still equal to about 36.2% of the foundry’s quarterly revenue. This shows why investors remain cautious about Intel’s strategy of building a major contract chipmaking business.
Intel’s product businesses are currently helping support the company’s large manufacturing investments. Data Center and AI revenue increased 59% to $6.3 billion, according to Intel. Client revenue rose 13% to $8.9 billion. These businesses give Intel more financial support while the company continues investing heavily in its foundry operations.
Intel reported $16.1 billion in companywide revenue, up 25% from a year earlier. Its non-GAAP gross margin reached 41.8%. The company also generated $7 billion in operating cash flow. These numbers show that Intel’s overall business has improved even though its foundry operation continues to report significant losses.
Intel is relying heavily on High-NA EUV technology for its 14A manufacturing process. EUV, or extreme ultraviolet lithography, is used to create extremely small patterns on semiconductor wafers. Intel says High-NA EUV can help print smaller features and increase pattern density compared with existing EUV systems, according to Intel Foundry. The technology is therefore an important part of Intel’s plan to compete with leading chip manufacturers.
Why this matters for Intel stock
The latest 14A data give Intel investors a reason to be more positive about the company’s technology. Faster improvement in defect density could eventually lead to better yields and lower manufacturing costs. Rising customer interest could also help Intel build its external foundry business.
But the financial benefits are still several years away because high-volume 14A production is not expected until 2028. Until then, investors will continue watching whether Intel can reduce its foundry losses while successfully developing the new technology.
Analysts are still cautious on Intel stock
Analyst sentiment remains mixed rather than strongly bullish. Of 50 tracked analysts, 16 have a buy rating, 31 have a hold rating and three have a sell rating, according to MarketBeat. The average analyst price target is $107.46. The large number of hold ratings shows that many analysts are waiting for clearer evidence that Intel’s technology progress can translate into stronger profits.
A lower defect density does not directly guarantee high production yields. Intel could face delays in bringing 14A into commercial production. Weak demand from outside customers could reduce the amount of manufacturing capacity Intel is able to sell. The high cost of High-NA EUV equipment could also make the manufacturing process more expensive. These risks could delay the point at which Intel Foundry starts generating meaningful profits.
Intel’s latest 14A data are an encouraging sign for its chipmaking technology, but they are not proof that the foundry business is turning profitable. The company is showing better defect-density performance and stronger customer interest.
At the same time, Intel Foundry is still losing more than $2 billion a quarter. For Intel stock, the major test will be whether the company can turn its 14A technology progress into high-volume production, more customers and eventually sustainable profits.
