What Happened to Intel Foundry Services (IFS)?

Intel Foundry Services (IFS) represents Intel's ambitious third foray into the contract chip manufacturing market, officially launched in March 2021 as a cornerstone of CEO Pat Gelsinger's 'IDM 2.0' strategy. This initiative aimed to leverage Intel's extensive manufacturing capabilities to serve external customers, a significant departure from its historical vertically integrated model. The initial skepticism surrounding this venture, given Intel's past attempts (Intel Custom Foundry), has gradually given way to cautious optimism as IFS demonstrates tangible progress.

A pivotal turning point for IFS came with a leadership change. Following Pat Gelsinger's departure, Lip-Bu Tan was appointed CEO of Intel in March 2025, bringing a 'foundry-first' discipline to the company. Under Tan's leadership, Intel committed to an aggressive process roadmap, culminating in the successful completion of its '5 Nodes in 4 Years' strategy. The cutting-edge Intel 18A process node, featuring RibbonFET (Gate-All-Around) transistors and PowerVia (backside power delivery), officially entered high-volume manufacturing (HVM) in January 2026. This was followed by the Intel 18A-P, a performance-enhanced variant, entering risk production in June 2026, offering significant performance and power efficiency improvements.

IFS has been actively pursuing and securing external customers. Microsoft confirmed its intention to use the 18A process for a custom AI chip, and Amazon Web Services (AWS) is partnering with Intel for an advanced AI Fabric Chip on the same node. Rumors also suggest that Apple is qualifying the 18A-P node for its M-series chips, with potential production starting in 2027, and Google is exploring Intel's advanced packaging solutions like EMIB for its TPU designs. Tesla has reportedly signed on for the upcoming 14A node. In July 2026, Fortinet was announced as a customer for custom-ASIC development and foundry services. Intel CEO Lip-Bu Tan confirmed in August 2026 that IFS has "multiple customers engaged," driven by improvements in its 14A and 18A processes.

Financially, IFS is in a heavy investment cycle. In Q2 2026, the division generated $5.8 billion in revenue, a 31% year-over-year increase, but still incurred an operating loss of $2.1 billion, though this was an improvement from the $3.2 billion loss a year prior. Crucially, only $293 million (approximately 5%) of this revenue came from external customers, with the majority being internal Intel product manufacturing. Intel has raised its 2026 capital spending to $20 billion and projects IFS to break even by the end of 2027, with significant investment expected through 2028 to support process ramps and capacity expansion. The company also made a strategic move in early 2025 by carving out its manufacturing operations into a wholly-owned subsidiary, Intel Foundry, to enhance flexibility and focus.

As of August 2026, IFS's current status is one of accelerating momentum and strategic importance. Intel anticipates controlling about 20% of the world's most advanced logic capacity by late 2026, positioning itself as a critical alternative to Asian foundries amidst geopolitical concerns and supply chain vulnerabilities. The company continues to push its roadmap, with early development for 10A and 7A nodes underway, demonstrating a long-term commitment to leading-edge manufacturing. The appointment of Seok-Hee Lee in June 2026 to lead advanced packaging further underscores Intel's focus on system-level innovation. While the path to sustained profitability and market leadership remains challenging, IFS is making tangible strides in technology, customer acquisition, and operational execution.