Shares of Intel (INTC 2.48%) have soared more than 20% so far in August. The struggling chipmaker is still facing serious issues, with market share losses to AMD piling up and a lack of major customers for its semiconductor foundry business raising questions about the whole endeavor. The Intel 18A process is reportedly facing yield issues, and there were recently rumors that new Intel CEO Lip-Bu Tan was considering giving up on trying to win external foundry customers for Intel 18A and instead focusing on Intel 14A.
While Intel's turnaround is plodding along, the value of the company's U.S. manufacturing assets is getting some attention. Japan's Softbank injected $2 billion into the company by buying equity earlier this week, and it reportedly discussed buying Intel's foundry business outright before striking that deal. The U.S. government is also on the cusp of getting involved, with the Trump administration reportedly discussing taking a 10% stake in Intel.
The money will help, given the enormous capital requirements involved in building advanced semiconductor manufacturing facilities. But more important for Intel is that these deals could push chip designers toward giving Intel a chance as a manufacturer. If Intel can score even one major external foundry customer, this business will be put on a more viable path.
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How Softbank could help
Softbank owns a majority stake in Arm. Arm-based chips dominate the smartphone market, and they're starting to compete with Intel in PCs and servers as well. Arm doesn't sell chips directly, instead licensing its designs and intellectual property to companies including Apple, Nvidia, Qualcomm, and many others.
Intel has been collaborating with Arm since 2023 to ensure the Intel 18A process is optimized for Arm-based chips. Earlier this month, Intel temporarily posted a video showcasing a reference SoC called "Deer Creek Falls," which is built on Arm technology and uses the Intel 18A manufacturing process. This is likely an effort to showcase that Intel 18A is capable of supporting advanced Arm-based chips.
For Arm-based chip designers, having a viable alternative to TSMC for manufacturing would be valuable, potentially lowering costs. And with the threat of massive U.S. semiconductor tariffs looming, using Intel for manufacturing could be a path to avoiding any tariffs.
How the U.S. government could help
While a deal between Intel and the U.S. government for a stake in the company is still up in the air, if the government does take a stake in Intel, it could create an incentive for chip designers to seriously consider Intel for manufacturing. Big tech companies have been making big promises about U.S. investments to curry favor with the Trump administration, including a $600 billion commitment from Apple. Apple has also committed to buying U.S.-sourced rare earth magnets.
It's unclear how involved the Trump administration would be in the event it does take a stake in Intel, but even if it remains a passive investor, chip designers may see choosing Intel for manufacturing as a way to pump up their made-in-America credentials. Intel 18A may not be an option for the largest chip designers like Apple or Nvidia, but both are reportedly considering Intel 14A for trial production.
NASDAQ: INTC
Key Data Points
Things are starting to look up for Intel
Intel still needs to regain lost market share in its PC and server CPU businesses, and it absolutely needs the Intel 18A process to deliver solid performance and efficiency gains, since the company has multiple products set to use the technology. Panther Lake for laptops is scheduled for launch later this year, and its Clearwater Forest server CPU will use Intel 18A when it launches in 2026.
There's a lot of work to be done, but capital infusions from Softbank and potentially the U.S. government will take some financial pressure off of the struggling company. On top of the new sources of cash, Intel may have better luck scoring external foundry customers with powerful backers having every incentive to see Intel's foundry efforts succeed.
For Intel stock to really soar, all it will take is a single large external foundry customer committing to the company. That looks more likely to happen now than it did even a few weeks ago, as Softbank and potentially the U.S. government get involved.
