On the final trading day of October, Intel shares crashed 29% in a single session, marking their worst one-day performance since the 1970s. Over the entire month of October, the stock fell a cumulative 45% 鈥?according to FactSet data, this was the worst monthly performance in Intel's history. Entering the first trading day of November, the stock dropped another 8%.
The catalyst was a earnings warning that disappointed Wall Street. Intel cautioned that revenue for the current quarter would come in $1 billion to $2 billion below analyst expectations. The reason points directly to the PC market: memory and other component costs remain stubbornly high, and consumers are increasingly reluctant to upgrade their computers. The PC business still contributes roughly half of Intel's revenue, and this vulnerability has been fully exposed.
Just a few months ago, Intel was the market's darling. In August 2025, the U.S. government took a 10% stake in Intel; Nvidia followed with a $5 billion investment. Buoyed by this, Intel's stock surged sixfold over 10 months, hitting a peak in June of this year. At the time, the market was full of expectations for Intel's positioning in the AI wave 鈥?its CPU products were being used to power virtual machines needed for agentic AI applications like Meta's Muse, creating a differentiated division of labor with Nvidia's and AMD's GPUs.
Now, that narrative has been interrupted by a quarterly warning.
Data Centers Emerge as New Hope, but Capacity Is Already Stretched
Intel CEO Lip-Bu Tan is not without cards to play. He stated that the global server processor market could grow fivefold from current levels over the next five years, reaching approximately $200 billion. In the third quarter of this year, Intel's data center business grew 78% year-over-year, generating $7.3 billion in revenue 鈥?strong momentum.
But a problem follows: Intel says it cannot manufacture enough chips to meet demand.
Intel attributes this to industry-wide supply tightness in wafers, substrates, and memory 鈥?precisely the same factors weighing on PC sales.
To "supplement capacity" for the data center business, Tan made a controversial decision: shifting some capacity at an Oregon facility from the most advanced 18A process to the older Intel 3 process, in order to produce more chips for server CPUs.
Shifting 18A Capacity 鈥?What Do Foundry Clients Think?
The cost of this decision falls on the foundry business.
18A is Intel's core technology for attracting external customers. Moving that capacity away directly undermines Intel's ability to demonstrate supply capability to potential clients.
David Yoffie, a Harvard Business School professor who served on Intel's board for nearly three decades, put it bluntly: "Their concern is that if Intel doesn't have excess capacity beyond meeting its own needs, then it's not a credible supplier."
Yoffie further warned: "If they can't find a large-scale foundry customer within a year, then the pressure on Intel's economic fundamentals will become even more pronounced."
In response, an Intel spokesperson said: "Client confidence in Intel's foundry business is built on execution. We are advancing according to our technology roadmap, 18A is performing strongly, and 14A is progressing steadily. We continue to engage deeply with customers and are focused on earning their business through consistent execution."
The Dilemma of "Competitors Are Also Customers"
The foundry business faces another structural obstacle.
Jordan Klein, an analyst at Mizuho Securities, noted that Intel, as one of the few companies capable of independently manufacturing and packaging advanced chips, has "greater control over its own destiny" than most chipmakers. But he also emphasized: "If you don't have enough capacity, you're simply leaving revenue and profit on the table."
Yoffie pointed to a deeper contradiction: chip design companies like Broadcom and Qualcomm may be unwilling to hand their chips to a company that simultaneously competes with them on the product side. He believes there is only one solution 鈥?"spinning off the foundry business, which is not only the best solution, but perhaps the only solution."
Klein added that AMD is probably the only major chip company that actively avoids considering Intel for foundry work, because the two companies compete directly in the CPU market, creating "competitive, confidentiality, and privacy issues."
Strategic Anxiety for U.S. Semiconductors
The impact of this crisis has extended beyond Intel alone.
Yoffie issued a warning from the perspective of national strategy: "Ultimately, TSMC's capacity in the United States can account for at most 20% to 25% of its global capacity, and it will take years. If the United States has no domestic foundry, then in the event of a geopolitical problem, or a supply chain crisis like the COVID pandemic, it would be a disaster for this country and the U.S. semiconductor industry."
Currently, Intel's 18A chips have entered mass production at its Arizona facility, with a second factory under construction; the new Ohio plant has just completed the installation of its first structural truss, but the overall project is nearly five years behind its original schedule.
Tan said he will announce "several customers" within the next two quarters. Whether this promise can be fulfilled will serve as a key signal of whether Intel's foundry transformation can emerge from its darkest hour.
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