Intel has scrapped product launches and slowed its process technology roadmap as it embarks on a path toward a rebound that will take years, according to analysts surveyed by EE Times.

The company’s new top management, Michelle Holthaus and David Zinsner, are more realistic on challenges from competitors like AMD in processors and TSMC in the foundry business, according to C.J. Muse, Senior Managing Director of Cantor Fitzgerald.

“Intel’s new co-CEOs hosted their first conference call with commentary balanced and realistic, highlighting the meaningful challenges ahead at Intel and the view that there are no quick fixes, unfortunately,” Muse said in a report provided to EE Times.

Last week, Intel reported that the company swung to a loss of $126 million in Q4 2024 from a profit of $2.67 billion in the same period a year earlier.

It has been roughly two months since Holthaus and Zinser took the helm as interim co-CEOs, replacing predecessor Pat Gelsinger. Zinsner is chief financial officer, and Holthaus has the newly created position of CEO of Intel Products, a group including the Client Computing, Data Center, AI and Network, and Edge business units.

Intel has lost market share in its core CPU business to AMD while failing to enter new businesses like smartphone and AI chips. Intel’s effort to divest its chipmaking unit, Intel Foundry, as a standalone business is likely to take years. Intel Foundry needs to catch up with foundry leader TSMC.

“From day one, we have been working closely together alongside the board to drive better execution of our strategy,” Holthaus said in prepared comments. “There are no quick fixes—and we are committed to improving our performance and rebuilding our credibility through persistent hard work that delivers tangible results.”

That new credibility includes a slowdown in the ramp of the 18A node that Intel expects will bring the company abreast with TSMC in process technology, according to Bernstein Research managing director Stacy Rasgon.

“While commentary on the health of 18A and the process roadmap remains positive, they have now delayed the lead product on that node, Clearwater Forest, now pushed out a year to the first half of 2026,” Rasgon said in a report provided to EE Times.

Clearwater Forest is Intel’s next-generation Xeon data center processor incorporating chiplets and 3D stacking.

Reliance on rivals

Intel, the largest U.S. chipmaker, will still rely on rival TSMC and other chipmakers as suppliers for chiplets, which Intel refers to as tiles.

Intel’s outsourcing to competitors undermines the company’s profitability. Still, the strategy helps the company launch new products more quickly.

“[They] talked about the outsourcing mix increasing on Nova Lake relative to Panther Lake and discussed an openness to outsource future data center products, all which makes us nervous,” Rasgon said in the Bernstein report.

Panther Lake will use Intel’s 18A process, Holthaus said on a conference call with analysts. “When you look forward to our next generation product for client, Nova Lake, we’ll actually have tiles both inside and outside for that process.”

Intel has delayed the launch of data center processor Clearwater Forest to the first half of 2026, Holthaus said. Intel is also slowing the rollout of other processors on 18A.

“18A is doing just fine on performance and yield for Granite Rapids, but it does have some complicated packaging expectations that move it to 2026,” Holthaus said.

Granite Rapids is Intel’s term for its sixth generation of Xeon server processors designed for HPC applications.

Intel needs to provide data center customers with a complete solution, Holthaus said.

“We’re going to be able to do that with Jaguar Shores,” she told analysts on the call. Falcon Shores will become an internal test chip. “Falcon Shores, I’m sure, will help us in that process of working on the system, networking, memory, all the component functions, but our customers really want that whole rack-scale solution.”

Rasgon voiced doubts about Intel’s ability to compete in AI chips.

“The AI accelerator story looks dead with the cancellation of Falcon Shores as a saleable product,” he said.

Other analysts see Intel’s changes as a positive.

“Intel is truing up its roadmap and delivery schedules,” Moor Insights chief analyst Patrick Moorhead said in a post on LinkedIn. “All in all, I think this reset is good for the company.”

Price competition

Intel aims to be more price competitive, Zinsner said.

“The cost structure is under some pressure in particular because of Lunar Lake,” he said. “Intel Products’ gross margins are going to be under pressure this year. Some of the parts have a higher cost. In particular, Lunar Lake has a higher cost because it’s got the memory and package and so on. We’re basically buying that memory and turning around and selling it at the same price. That’s actually bringing the margin down. Margins, the price is going to be under pressure pretty much throughout this year.”

Intel will be far more aggressive on pricing for now, bringing even more risk to margins, according to Rasgon.

“That absolutely will impact the gross margins on products,” he said. “There won’t be a lot of lift in that business unit through the year. It’s really not until Panther Lake comes that they, I think, start to see some better cost structure.”

Capex cut

Intel will cut its 2025 capex to about $20 billion. About half of that money will come from government subsidies and partner contributions.

“What you’ll see a lot of is a little bit more conservatism around how we deploy capital,” Zinsner said. “We built up a pretty significant balance in assets under construction to the tune of greater than $50 billion. So, we actually have a lot of capital on the balance sheet that really hasn’t been deployed.”

Intel has an agreement with the U.S. Department of Commerce (DoC) for an award of up to $7.86 billion in grants.

The company received $1.1 billion in the Q4 2024 and an additional $1.1 billion in January this year.

“In addition, we continue to make good progress building out our Secure Enclave in partnership with the Department of Defense,” Zinsner said. “We look forward to continued engagement with the Trump administration as we advance this work and support their efforts to strengthen U.S. technology and manufacturing leadership.”

Last year, the DoC awarded Intel up to $7.9 billion in direct funding under the CHIPS Act. The award will support Intel’s expected U.S. investment of nearly $90 billion by the end of the decade, which is part of the company’s overall $100-plus billion expansion plan, the DoC said in a statement at the time. The DoC added that it will disburse the funds based on Intel’s completion of unspecified project milestones.

Zinsner said that he and Holthaus have met with the new Trump administration on several levels. While Trump said the CHIPS Act is “so bad,” the administration has yet to take a formal position on the legislation that aims to revive the declining U.S. semiconductor industry.

Haves and have nots

The chip industry has split into AI haves and have nots. TSMC, which makes AI chips for Nvidia and others, has more orders than it can meet. Smaller foundries like Samsung and Intel are struggling to find customers.

TSMC plans to spend between $38 billion and $42 billion on capex in 2025, nearly doubling Intel’s forecasted expenditures.

Samsung has not disclosed its capex plans for this year.

In a statement on its 2024 results, Samsung said profit for its foundry business decreased due to lower fab utilization rates and higher R&D expenses for advanced-node technology. Samsung said its most advanced 2-nm gate all around technology is under development, while its 4-nm process is in production for HPC products.

By: DocMemory
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