• Intel's new CEO Lip-Bu Tan is exploring a significant overhaul of the company's foundry business.
• The strategy may involve abandoning the 18A chip process in favor of 14A to attract major customers.
• Last year, Intel reported its first net loss since 1986, totaling $18.8 billion.
• Industry analysts warn of potential financial write-offs associated with discontinuing 18A.

Intel's new CEO, Lip-Bu Tan, is reportedly considering a significant shift to its contract manufacturing, or "foundry," operations in an effort to attract major clients, as revealed by sources familiar with the matter. This potential move indicates a departure from strategies established by former CEO Pat Gelsinger and may involve abandoning the marketing of its 18A chipmaking technology to external customers, which has cost Intel billions to develop. Analysts suggest this change could lead to substantial financial implications, potentially resulting in write-offs totaling hundreds of millions, if not billions, of dollars, according to Channel News Asia and Reuters.

Since taking over in March, Tan has actively reassessed Intel's strategies, especially concerning the 18A process, which has not garnered sufficient external client interest. This reassessment comes as the chipmaker aims to recover from a staggering net loss of $18.8 billion in 2024, marking its first unprofitable year since 1986. The company is now pivoting its focus towards the 14A process, which allegedly promises a competitive edge over rivals like Taiwan Semiconductor Manufacturing Co (TSMC), and aims to secure large clients such as Apple and Nvidia, according to reports by South China Morning Post and India Times.

Tan's intentions, as perceived by sources, may involve significant discussions with Intel's board of directors, which could take place as early as this month. The strategy aims for Intel to shift resources from the 18A process, which has suffered from delays, to the 14A process, believed to be more appealing to prospective clients. Reports indicate that a final decision regarding the fate of the 18A process may not be reached until later in the year due to the high stakes involved, according to India Times.

While restructuring, Intel plans to focus on sustaining production commitments for the 18A process, particularly for orders from clients such as Amazon and Microsoft. These commitments will be honored despite a shift in focus since their deadlines do not align with the new 14A technology development, as indicated by the company and corroborated by Reuters and South China Morning Post.

The implications of this potential shift are profound, as the 18A manufacturing technology, which includes new energy delivery methods and transistor advancements, was developed to enable Intel to compete effectively with TSMC's capabilities. However, some analysts believe that the 18A technology may only offer equivalent performance to TSMC's N3 manufacturing process, which has already entered high-volume production, highlighting Intel's urgent need for strategic changes, according to India Times and South China Morning Post.