Intel Foundry's operating loss narrowed to $2.1 billion in the second quarter of 2026, down from $3.2 billion a year earlier, as revenue climbed 31% to $5.8 billion. External customers supplied only $293 million of that revenue, with the rest coming from Intel's own product groups. The company still targets foundry break-even in 2027.
Intel Foundry's operating loss narrowed to $2.1 billion in the second quarter, down from $3.2 billion a year earlier. Revenue at the unit rose 31% to $5.8 billion, an acceleration from 16% growth in the first quarter. The loss per dollar of revenue fell from about 72 cents to about 36 cents over the same year.
Production gains drive the narrower loss
The company says the improvement traces back to the factories themselves. Production on Intel 18A, the company's newest widely deployed manufacturing process, came in about 25% above Intel's internal target and rose more than 50% from the first quarter. Better yields and faster cycle times have cut the cost of the Panther Lake chip by roughly 50% so far this year.
Intel's own orders still fund most of the growth
External customers supplied just $293 million of the foundry's $5.8 billion in quarterly revenue — the rest came from building chips for Intel's own product groups. That internal demand is tied to real strain elsewhere in the business: Intel's data center and AI segment grew revenue 59% year over year last quarter, and the company says it is supply constrained. In the company's published earnings call remarks, chief financial officer David Zinsner said customers "continue to signal a strong and sustainable spending environment."
Intel still has not landed a major external customer for its leading-edge processes: Fortinet, which became the foundry's first named customer under CEO Lip-Bu Tan in July, is buying chips built on an older process.
The bridge to break-even is the next process node
Intel is targeting foundry break-even in 2027, a goal Zinsner has said requires only a few billion dollars of additional external revenue beyond the roughly $1.2 billion a year outside customers currently pay. The bridge is Intel 14A, the next manufacturing process, which is moving toward risk production in 2027 with high-volume output committed for 2028 — so meaningful outside volume likely arrives near that deadline, not ahead of it. On Monday, Intel announced a $15 billion common stock offering to fund the build-out without adding new debt.
The stock has risen more than 160% in 2026 and trade near 60 times next year's expected earnings, a rich valuation that assumes the foundry bet has already been won. The foundry is doing what Intel said it would, a quarter at a time — but at this price, it needs to keep doing exactly that for two more years.
Source: The Motley Fool
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