Intel's Slow-Burn Strategy: Foundry Revenues 'Not Till 2027,' Analyst Predicts Spin-Off Ahead

Intel Corp INTC just gave its employees a much-anticipated update, but don't expect any earth-shattering surprises.

JPMorgan analyst Harlan Sur weighed in on the company's long-term outlook, and it's clear that Intel is in no rush. The chip giant is playing the long game, with external foundry revenues not expected to ramp up until – wait for it – 2027. That's a lot of time for investors to wait and hope.

Sur continues to rate Intel underweight with a price target of $26 by December 2025, a modest rise from its current $20.91. But for investors looking for fireworks, Intel's recent announcements might feel more like a slow simmer.

Foundry Revenue? Come Back In 2027

If you were hoping Intel's foundry business would start printing cash soon, it's time to adjust those expectations. According to the latest update, "the team has not changed its view of meaningful revenue ramp by external foundry customers until 2027," a date that's starting to feel like the finish line for Intel's big plans. Intel sees “meaningful 18A external foundry revenues not till 2027.”

But there's a bright spot: Intel is continuing to build its pipeline, and an expanded collaboration with AWS might help bolster confidence.

Intel will be working with Amazon.com Inc AMZN to produce an AI fabric chip—not the high-profile AI accelerator chip everyone's talking about, but a lower-volume version. Still, Intel's involvement with AWS could pay dividends in the long term.

As Sur noted, "customer engagement is improving," with Intel working on custom Xeon 6 chips for Amazon on its Intel 3 process, adding to the cloud giant's suite of custom designs.

Capex Cuts, Project Delays: The Waiting Game Continues

Intel's capex plans for 2024 and 2025 are holding steady at $25-27 billion and $20-23 billion, respectively. However, the company is playing a bit of a waiting game, pushing out project timelines at its plants in Poland and Germany by about two years.

The advanced packaging plant in Malaysia is also getting delayed to better align with market demand. It's not the most exciting news for investors looking for near-term results, but Intel's U.S. projects, particularly in Arizona, New Mexico, and Ohio, are still on track.

Foundry Gets A Makeover: New Subsidiary On The Horizon

One of the more intriguing developments is Intel's decision to establish its Foundry business as an independent subsidiary. This move is aimed at boosting transparency and efficiency—a logical step that could signal bigger changes down the road. As Sur noted, "this move should not be viewed as a surprise." The new subsidiary will feature its own operating board, with independent directors to help steer the ship.

This could be a significant step toward a potential spin-out of Intel's foundry business in the future, something that might finally unlock more value for investors. For now, though, it's all about laying the groundwork and getting the structure in place, the analyst said.

Is Intel's Long Game Worth The Wait?

Intel's recent announcements don't change the fact that its growth story is more of a marathon than a sprint. Investors hoping for quick wins will need to be patient, as key milestones—like the ramp in external foundry revenues—are still years away. But with expanded partnerships like the one with AWS and a more streamlined Foundry operation, Intel is slowly positioning itself for long-term success.

So, while 2027 feels like an eternity away, the company is showing signs of progress. The question is: will investors have the patience to wait for the payoff? If you're looking for immediate results, Intel might not be the stock for you. But for those willing to play the long game, there are some glimmers of hope on the horizon.

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