The Foundry Disconnect: Intel Nails the Transistor, But TSMC Holds the Keys to Yield and Scale.
Intel can now build a transistor that rivals anyone in the world, yet its foundry business is bleeding billions while TSMC signs hundreds of outside customers. The two latest earnings reports expose a gap that transistor specs alone cannot close.
Intel (NASDAQ:INTC | INTC Price Prediction) and Taiwan Semiconductor Manufacturing (NYSE:TSM) have both reported, and together the results set out the foundry race clearly. Intel posted its strongest revenue growth in more than fifteen years as Intel 18A scaled up. TSMC answered with a fast 2nm ramp and a 66.4% gross margin. Intel can now build the transistor. TSMC builds it at a scale nobody else matches.
Intel’s Own Chips Fill Its Fabs While AI Fills TSMC’s
Intel’s revenue rose 25.4% to $16.13B. Xeon did most of the work, with Data Center and AI up 59%. The manufacturing story improved too. 18A output came in approximately 25% above target, and CFO David Zinsner said Intel Foundry “has driven down the cost of our primary Panther Lake SKU by roughly 50% year-to-date.”
Look at who those wafers serve, though. External foundry revenue was only $293 million, and the division lost $2.1 billion. Most of the proof of 18A still comes from Intel’s own chips.
TSMC’s quarter ran on outside customers. Revenue reached $46.72B, and high-performance computing made up 68% of sales. Chairman C.C. Wei said: “All the AI players are working with TSMC.” That expansion has to be powered, cooled, and connected by someone too, which is the whole point of our free report on seven AI infrastructure suppliers that aren’t chipmakers.
| Business Driver | Intel | TSMC |
|---|---|---|
| Growth Engine | Xeon server CPUs | AI and HPC wafers |
| Newest Node | 18A, mostly internal products | 2nm at 8% of wafer revenue |
| Customer Reach | $293 million external foundry sales | 534 customers in 2025 |
| Gross Margin | 40.4% GAAP | 66.4% |
Intel Sells the Whole Stack, TSMC Sells Trust
Intel’s CEO, Lip-Bu Tan, pitched integration, calling Intel “the only company that can design, manufacture, and build the entire range of computing solutions.” He also said EMIB-T packaging has a growing backlog and that Intel already uses High NA EUV on Panther Lake. TSMC is taking its time with High NA and plans to start using it in 2030.
TSMC answers with yield. It has 79% of wafer revenue at 7nm and below. On packaging at 5x reticle size, Wei said “I don’t believe that anybody can do that today except TSMC, and the yield is excellent.” Gross margin slid 1.3 percentage points sequentially as 2nm diluted it, a small cost of leading the transition.
Watch Whether Intel 14A Lands Outside Customers
Intel’s next node, 14A, is the real credibility test. I will be watching whether outside customers sign up and whether foundry losses keep falling. INTC fell 30.98% over the past month, even after Barron’s linked a recent jump to Musk’s Terafab comments.
For TSMC, keep an eye on Q4 guidance of $52.3B to $54.3B and on N2 capacity, which the company expects to more than double in 2027.
Valuation Gap Separates Intel From TSMC
I respect Intel’s execution, and Xeon demand looks real. Still, I’m being asked to pay about 63x forward earnings for a foundry whose customers are still mostly Intel itself. TSMC trades near 21x forward earnings, with paying customers and yield it has already shown. That gap in valuation and customer base is the clearest difference between the two foundries. Intel shares have shown large price swings as the turnaround plays out. A major external 14A customer win would be the clearest signal for Intel’s foundry case.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
