Intel (INTC 5.68%), the world's top manufacturer of x86 CPUs, was once a reliable tech stock. Yet over the past five years, its stock declined by 13% while the S&P 500 rose by 83%.
Intel lost its luster as it fell behind TSMC (TSM 4.96%) in the "process race" to manufacture smaller, denser chips, and it ceded a massive slice of its PC market to AMD (AMD 3.46%). As it faced those existential challenges, it abruptly shifted its strategies under four different CEOs over the past eight years.
Image source: Getty Images.
Intel's newest CEO, Lip Bu-Tan, took the helm in March 2025 and doubled down on its commitment to manufacturing its own chips and reclaiming the process lead from TSMC. It plans to use ASML's (ASML 2.61%) newest lithography systems to achieve that goal.
That's why many investors have been closely tracking Intel's investments in ASML's high-NA extreme ultraviolet (EUV) lithography systems. The bulls believe those cutting-edge systems will give it a significant advantage over TSMC. The bears think Intel is plowing too much cash into those pricey systems and prematurely shifting away from its older low-NA EUV systems.
NASDAQ: INTC
Key Data Points
The story thus far...
Intel, TSMC, and other foundries use ASML's lithography systems to optically etch circuit patterns onto silicon wafers. Its older deep ultraviolet (DUV) systems are used to produce older and larger chips. Its newer EUV systems, which require multiple planes and trucks to ship, are used to create the world's smallest, densest, and most power-efficient chips.
ASML is the world's largest producer of DUV systems and the only producer of EUV systems. By installing ASML's EUV systems before Intel, TSMC pulled ahead in the process race with smaller chips from 2018 to 2020. During those three critical years, Intel tried to push its older DUV systems to their limits rather than switching to EUV -- but that cost-conscious strategy backfired, leading to chip shortages and production delays.
As Intel stumbled, AMD (AMD 3.46%) outsourced its x86 CPU production to TSMC's superior EUV-equipped foundries. As a result, AMD pulled ahead of Intel with smaller, denser, and cheaper chips.
According to Mercury Research, AMD's share of the desktop x86 CPU market surged from 13% to 33.6% between the third quarters of 2018 and 2025. Intel's share plunged from 87% to 66.4% during the same period. Moreover, AMD's Epyc CPUs -- which were also manufactured by TSMC -- gained ground against Intel's Xeon CPUs in servers.
Is Intel learning from its past mistakes?
Today, TSMC and Intel both use ASML's low-NA EUV systems, which cost about $220 million, to produce their tiniest and most sophisticated chips. TSMC uses those systems to make its 2nm to 3nm chips, while Intel uses them to create its Intel 3 chips (which are comparable to TSMC's 5nm chips).
But to mass-produce even smaller chips, both chipmakers will eventually need to use ASML's high-NA EUV systems, which cost up to $400 million each. Just like the previous jump from DUV to low-NA EUV, the leap to high-NA EUV would require massive investments from TSMC and Intel.
TSMC plans to push its existing low-NA EUV systems to the limit to mass-produce chips up to its A14 (1.4nm) node in 2028. It's only installed a single high-NA EUV system for R&D so far, and it doesn't plan to deploy more systems to mass produce its smaller chips until around 2030.
Meanwhile, Intel has already deployed two high-NA EUV systems for R&D purposes, and it installed its first commercial high-NA EUV system last December. It plans to use those systems to mass produce its 14A chips (comparable to TSMC's A14 chips) in 2027 and 2028.
If Intel successfully launches its 14A chips before TSMC's A14 chips, it can finally claim technological superiority against TSMC in the process race. However, Intel's chips could also be much more expensive to manufacture at scale because they use high-NA EUV rather than low-NA EUV. Those high costs could ultimately nullify Intel's head start if it can't produce enough chips.
Why will 2026 be a crucial year for Intel?
2026 could be a make-or-break year for Intel because it marks the final year it can stabilize its high-NA EUV process to ramp up its risk production of 14A chips in 2027. It also still needs to expand its 20A and 18A nodes (which use a mix of low-NA and high-NA technologies) this year before it can consider challenging TSMC with its 14A chips.
That's why analysts expect Intel's net loss to widen from $267 million in 2025 to $400 million in 2026. That would mark its third straight unprofitable year. However, they also expect it to turn profitable again in 2027 with a net profit of $2.3 billion, and for that figure to surge to $4.1 billion in 2028. That optimistic outlook assumes its big bet on ASML's high-NA EUV systems will pay off -- so investors should carefully track those delicate plans over the next few quarters.
