Intel's foundry surge challenges TSMC's 90% grip on advanced chips

Intel's foundry turnaround has won Apple as a customer, but TSMC still controls more than 90% of the world's most advanced chip production.

Intel's foundry business has secured a reported chipmaking agreement with Apple, validating years of heavy investment — yet Taiwan Semiconductor Manufacturing still produces more than 90% of the world's most advanced chips, a lead measured in years.

"Demand is very robust, especially from the HPC and AI applications," TSMC Chairman and CEO C.C. Wei said during the company's first-quarter earnings call, noting that supply remained tight even as the company rushed to pull in equipment.

Intel shares surged 10.75% on June 18 after President Donald Trump posted on Truth Social that Apple had agreed to work with Intel to design and build chips in the U.S. The stock, which started 2026 near $37, now trades at $133.99 — a gain of roughly 260%. Intel's 18A-P process, an enhanced node built for Apple's chips, has entered risk production with up to 9% higher performance and 18% lower power versus the base 18A node, the company said.

The question for investors is whether Intel's momentum can translate into meaningful market share against a dominant incumbent. TSMC posted first-quarter revenue of $35.9 billion, up 41% year over year, with a gross margin of 66.2% and an operating margin of about 58%. Intel Foundry generated $5.4 billion in revenue in the same period — but just $174 million came from external customers, and the segment posted a $2.4 billion operating loss.

The Apple Deal and What It Actually Changes

According to reporting on the agreement, Apple would use Intel's 18A-P process for lower-end chips only, while TSMC retains more than 90% of its supply. The two sides had reportedly reached a preliminary agreement after more than a year of talks, meaning the political announcement formalized something already in motion. Intel said on June 16 that 18A-P had entered risk production, a low-volume manufacturing stage in which the company produces full wafers to gather data on defect rates and performance before full production begins.

The Apple deal does not stand alone. Intel has pointed to a collaboration with Nvidia and a multibillion-dollar deal to make custom AI chips for Amazon. A separate report placed a Google order for more than 3 million custom AI chips at Intel Foundry for 2028. Whether any single deal closes on the reported terms, the pattern is clear: Intel is being tested by the customers that matter.

Why TSMC's Moat Remains Wide

TSMC controls about 70% of the pure-play foundry market and more than 90% of leading-edge production — the cutting-edge nodes that the most advanced AI and smartphone chips require. The company expects 2026 revenue to grow more than 30% in U.S. dollar terms and plans to spend toward the high end of a $52 billion to $56 billion budget to add capacity. Building a new plant takes two to three years, Wei said, meaning supply constraints will persist even as demand from AI applications keeps accelerating.

Intel, by contrast, is still losing money in the foundry business central to its comeback. Chief Financial Officer David Zinsner said at a Bank of America conference that Intel is targeting the "Rule of 45" — revenue growth plus operating margin summing to 45 — as a multi-year goal. He also said Intel is "likely going to pull in those milestones by at least a quarter" on the path to foundry-supporting margins, a timeline previously anchored to end-2027. On the next node, he said, "We're already ahead on 14A."

The Investment Calculus

Intel trades at roughly 126 times forward earnings and 34 times forward EV/EBITDA — multiples that only work if the earnings base is about to change shape. Nvidia trades near 21 times forward earnings and Broadcom near 26 times, both far more profitable today. The bull case, modeled by TIKR at roughly $300 per share by 2030, assumes around 12% revenue growth and a net income margin recovering toward 15%, driven by server CPU demand from AI inference and external foundry customers converting evaluation into committed volume. The risk is the mirror image: if 18A and 14A yields slip, the margin recovery that justifies the premium multiple never arrives.

The next data point comes July 23, when Intel reports second-quarter results. Management guided non-GAAP gross margin to around 39% for the year. Hold at or above that level, and the yield-and-pricing recovery is on schedule. Slip below 37%, and the timeline moves right.

This article is for informational purposes only and does not constitute investment advice.