Intel Stock Falls After Reported Manufacturing Shift To Compete With TSMC, Attract Apple And Nvidia

Intel (INTC) shares fell as much as 4% in morning trade on Wednesday after Reuters reported the company’s new CEO Lip-Bu Tan is reportedly considering a major shift in the company’s chip manufacturing strategy.

Intel’s stock extended its weekly slide to more than 3% with Wednesday’s fall. However, retail sentiment on Stocktwits improved to ‘neutral’ territory from ‘bearish’ a day ago. 

According to the report, this Intel switch means stopping the promotion of its costly 18A chipmaking technology to external customers. The company, under former CEO Pat Gelsinger, has spent billions developing 18A and its variant 18A-P. Dropping it could mean taking on deep losses, potentially costing the company hundreds of millions. 

Instead, Tan is reportedly focusing on a next-generation process called 14A. He believes this process could offer Intel an edge over Taiwan’s TSMC (TSM) and potentially attract some of its key customers, such as Apple (AAPL) and Nvidia (NVDA), as well.

According to the report, 18A is still being used for Intel’s own chips and for previously agreed contracts with Amazon (AMZN) and Microsoft (MSFT), but the company is no longer actively pitching it to new clients. 

Sources told Reuters that the core issue seemed to be that 18A had lost appeal with potential customers. They added that Intel’s board will begin discussing the fate of 18A later this month, noting that it's possible that a final decision may not be announced until the fall due to financial and strategic issues. 

Since taking the helm, Tan has already reorganized leadership and trimmed management layers in an effort to revive the company. Intel posted a loss of $18.8 billion for the fiscal year 2024, which marked its first annual loss since 1986. 

Intel’s stock has managed to gain nearly 8% this year but remains down by 30% in the last 12 months. 

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