Intel Corporation’s evolving semiconductor strategy is once again in the spotlight as the chipmaking giant released its second quarter earnings Thursday, highlighting both financial resilience and a deepening reliance on outsourcing to maintain competitiveness in a turbulent global market.
The company reported earnings that slightly exceeded Wall Street expectations, buoyed by robust demand in AI infrastructure and strong sales in its client computing group. Revenue for the quarter reached $13.4 billion, up 3% year over year, while adjusted earnings per share came in at $0.48, compared to the consensus estimate of $0.45.
But beyond the numbers, it was Intel’s accelerated pivot toward outsourcing and its foundry business overhaul that drew significant attention from investors and analysts alike.
A Strategic Shift in Manufacturing
Facing intensifying competition from Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung, Intel has increasingly leaned into outsourcing parts of its chip production, a significant shift from its longstanding tradition of end to end in house manufacturing.
CEO Pat Gelsinger reaffirmed the company’s commitment to its IDM 2.0 strategy, a hybrid model combining internal production with external foundry partnerships. “To remain a leader in the AI and high performance computing era, we must balance innovation with manufacturing agility,” Gelsinger said during the earnings call.
Intel confirmed that its upcoming 18A chips, critical to regaining process leadership, will involve significant collaboration with third party foundries. While Intel aims to manufacture some 18A products in house at its Arizona and Ohio fabs, others will rely on external partners, with TSMC reportedly tapped for portions of the chip’s advanced node production.
Market Reaction and Industry Impact
Investors appeared cautiously optimistic. Intel shares rose about 2.1% in after hours trading, signaling confidence in the company’s roadmap, even as questions remain about execution and margins.
“Intel is navigating one of the most challenging periods in its history,” said Stacey Rasgon, semiconductor analyst at Bernstein Research. “Outsourcing is no longer optional—it’s a necessity to compete with the likes of Nvidia and AMD, who already take full advantage of TSMC’s cutting edge processes.”
Industry observers note that Intel’s strategic outsourcing could signal a broader shift in U.S. semiconductor policy and supply chain thinking. The move also comes as Intel vies for a leadership position in the AI chip race, where time to market is increasingly crucial.
Looking Ahead
Intel reiterated its guidance for the full year, projecting revenue between \$54 billion and \$55 billion, driven by a recovery in PC demand and new AI accelerators set to debut in late 2025.
The next 12 months will be pivotal. If Intel’s hybrid manufacturing model delivers on schedule and cost, it could mark a turning point in the company’s multi year turnaround effort. But missteps could erode further market share to rivals already entrenched in outsourced production.
“In this business, speed and scale win,” Gelsinger emphasized. “We’re making bold moves to ensure Intel is positioned not just to survive but to lead.”
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