Intel Posts Results, Losses Mount For Foundry Unit
Intel Foundry continues to lose money, but it is making progress on other fronts
By Mark LaPedus
Intel posted mixed financial results for the second quarter ended July 23. The company saw strong demand for its processor lines in the market, but it also reported another loss in the quarter.
During the second quarter, Intel’s foundry unit also posted another large loss. Still, the company raised its 2026 capital spending budget.
In total, Intel reported sales of $16.1 billion in the second quarter of 2026, up 25% year-over-year. Net loss was $10.848 billion in the quarter, compared to a loss of $3.024 billion in the like period a year ago.
Still, Intel remains bullish. “AI is driving unprecedented demand for compute, and as we continue to execute, Intel is well-positioned to capture sustainable growth across our CPU franchise, ASICs, advanced packaging and vast wafer foundry network,” said Lip-Bu Tan, Intel CEO. “Our Q2 results represent our strongest revenue growth in more than fifteen years, enabled by greater speed, accountability, and customer focus.”
Intel Foundry: good and bad news
On the downside, though, Intel’s foundry unit reported an operating loss of $2.1 billion on sales of $5.8 billion in the second quarter of 2026. This compares to an operating loss of $2.4 billion on sales of $5.4 billion in the previous quarter.
This represents the tenth consecutive quarterly loss for Intel Foundry. In total, Intel Foundry has lost a total of $28 billion since the first quarter of 2024. (Intel began to break out its foundry sales starting in 2024.)
Most of Intel’s foundry sales come from the company’s own internal products. “Intel Foundry also includes certain third-party foundry and assembly and test revenues from external customers that totaled $293 million in the three months ended June 27, 2026, and $467 million in the first six months of 2026 ($22 million in the three months ended June 28, 2025 and $53 million in the first six months of 2025),” according to a filing.
On a positive note, Intel Foundry is making progress on other fronts. Intel’s new 18A process, a 2nm-class technology, is competitive. “INTC 18A yields saw meaningful improvements over the past quarter improving to 85% from 65% in the previous quarter,” said John Vinh, an analyst with KeyBanc Capital Markets, in a research note. “This still trails TSMC’s N2 yields of 90% but remains meaningfully above Samsung Foundry SF2 yields of 50-60%.”
Intel’s 18A-P process, the follow-on to 18A, has entered into risk production. Then, Intel’s next-generation process, called 14A, is on track. “We hear development of 14A remains on schedule and progressing better than 18A in terms of defect densities and is on track to ramp into mass production in 2H28,” Vinh said.
On top of that, Intel Foundry is winning business from a growing number of external customers. “Feedback from the supply chain continues to indicate INTC has foundry wins with AAPL on both 18A and 14A for low-end M-series processors for MacBooks and iPads,” Vinh said. “In addition to securing AAPL as a foundry customer on both 18A and 14A for low-end M-series processors, we believe INTC has also secured foundry design wins with AMD, NVDA, MRVL, MSFT, MU, and OpenAI.”
It’s unclear if Intel is providing foundry and/or packaging services for these customers. But Intel’s external packaging business remains strong, thanks to its EMIB-T packaging technology. Intel has won EMIB-T packaging business from Amazon, Google and Microsoft.
EMIB-T yields have reached 98%, according to Vinh. “However, INTC is supply constrained on substrates as yields are at 60-70%,” Vinh said.
Intel’s Q2 processor business
Meanwhile, Intel’s PC and datacenter processor businesses beat Wall Street’s expectations during the second quarter of 2026.
Intel’s Client Computing and Physical AI Group (CCPG), which makes processors for PCs, reported sales of $8.9 billion in the second quarter, up 13% from a year ago. Processor sales for the AI PC market increased 26% during the quarter, according to KeyBanc.
Intel’s Data Center and AI (DCAI) Group, which makes datacenter processors, reported sales of $6.3 billion in the quarter, up 59% from a year ago. Intel’s server CPU demand continues to outpace supply. However, the company’s datacenter processor unit recently implemented a round of layoffs, according to a report from CRN.
Outlook
For the third quarter of 2026, revenue is expected to be $15.8 billion to $16.8 billion. Meanwhile, the company raised its 2026 capital spending budget to $20 billion. That’s up about 13% year-over-year, according to KeyBanc.
“In addition, due to surging demand for server CPU for agentic AI workloads, we believe INTC plans to significantly expand capacity at 18A and on Intel 3 (Granite Rapids). More recently, we believe INTC has upwardly revised some of its foundry equipment orders by 30-40%,” Vinh said.