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With Intel showing signs of recovery, attention is now focused on its foundry operations

With Intel showing signs of recovery, attention is now focused on its foundry operations

Bitget-RWA2025/10/24 08:12
By:Bitget-RWA

Intel surpassed analysts’ forecasts for its third-quarter earnings on Thursday, thanks to increased revenue, deeper cost reductions, and several major investments in recent months as CEO Lip-Bu Tan works to revitalize the struggling chipmaker.

The company’s revenue and $4.1 billion net profit paint a much brighter picture compared to its previous streak of quarterly losses. However, Intel’s turnaround is also marked by aggressive cost-saving measures, including layoffs, and a series of significant investments from Softbank, Nvidia, and the U.S. government.

Intel reported a $20 billion increase to its balance sheet in the third quarter, as revealed in its earnings presentation on Thursday, which caused its stock price to surge. This boost was primarily driven by three major investments made in the past quarter.

In August, SoftBank contributed $2 billion. Shortly after, the U.S. government made an unprecedented move by acquiring a 10% equity stake in Intel. To date, Intel has received $5.7 billion out of a planned $8.9 billion from the government. In September, Nvidia also invested $5 billion as part of a broader collaboration to co-develop chips in the future.

“The steps we’ve taken to reinforce our balance sheet give us more flexibility in our operations and put us in a strong position to pursue our strategy with assurance,” Tan stated during the earnings call. “I am especially grateful for the trust President Trump and Secretary [Howard] Lutnick have shown in me. Their backing underscores Intel’s importance as the only leading-edge semiconductor company headquartered in the U.S. with advanced logic, R&D, and manufacturing.”

Additionally, Intel gained $5.2 billion from finalizing the sale of its Altera stake, a hardware firm it had owned since 2015, on September 12. The company also divested its shares in Mobileye, a company specializing in autonomous driving technology.

Intel’s revenue for the third quarter climbed by $800 million to reach $13.7 billion, up from $12.9 billion. The company posted a net profit of $4.1 billion, a significant turnaround from the $16.6 billion loss reported in the same period last year.

The foundry biz

Even with a strong quarter, Intel provided few updates on the future of its foundry division, which produces custom chips for clients. This segment has struggled since its inception and has been a focus for Tan, who implemented major layoffs in the foundry unit over the summer.

The foundry business appears to be a priority for the Trump administration; a key stipulation of the government’s investment is that Intel would face penalties if it exits the foundry business within the next five years.

Wall Street is closely monitoring the foundry segment as an indicator of Intel’s long-term prospects. In August, Intel analysts told TechCrunch that the company’s turnaround depends less on cash and more on a clear strategy to revitalize its foundry operations.

Tan mentioned that Intel believes its foundry business is “uniquely positioned” to benefit from the rising demand for chips, though he offered few specifics. He did note that Intel is actively working with potential foundry clients and emphasized that growth in this area would be managed carefully.

“Establishing a top-tier foundry is a long-term commitment built on trust,” Tan remarked. “As a foundry, we must ensure our processes are accessible to a diverse range of customers, each with their own approach to product development. Our goal is to exceed customer expectations as they rely on us for wafer production, meeting their needs for performance, yield, cost, and timely delivery.”

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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