Intel shares climbed nearly 3% on news of a significant manufacturing development, extending what has been an impressive run for the company. The broader chip sector, which had sold off the prior day, returned to rally mode, and Intel's specific news added momentum. The announcement was made at a conference in Hawaii.
The 18A-P Announcement
Intel revealed that it has begun production of its most advanced chip node, the 18A-P. While the concept of this chip node was first announced last year, the actual start of production was the new development. The node has now entered what is known as "risk production" — an early production stage in which the accompanying data indicates the chip will meet customer requirements upon final qualification. In other words, this is essentially the final step before full-scale, high-volume manufacturing begins.
The 18A-P is an upgraded, performance-focused version of the 18A node. The 18A is the technology currently used in Intel's Core Series 3 processors for laptops, which represent Intel's primary chip line. The 18A-P is designed for improved efficiency and output. After this initial manufacturing phase concludes, the 18A-P will move into high-volume manufacturing.
Statements from Intel's Foundry Leadership
The head of Intel's foundry business characterized the development as a "signal to Intel foundry customers and partners that we are fully committed to leading-edge process innovation over the long term." For Intel, the 18A-P represents another milestone in its ongoing turnaround efforts and its broader work to rebuild the foundry business. The foundry head added that "this is a journey and while we have more work ahead we appreciate the opportunity to share the progress we are making now."
This progress follows years of missteps and low manufacturing yields at the company. Intel previously promoted the 18A node as a key part of its turnaround — the technology that would finally convert the company into a competitive chip manufacturer capable of producing chips for non-Intel products.
Implications: Potential Customers and Competition with TSMC
If the 18A-P advances into full-scale production, much of the surrounding commentary suggests it would bring Intel one step closer to a possible deal to develop chips for Apple — a product Apple would reportedly be interested in. More broadly, Intel is working to build out its customer base as part of transforming its foundry business into a genuine competitor to TSMC, which has been the stated goal.
Reinforcing this, earlier in the month several reports — with The Information cited as the original source — indicated that Google and Nvidia are turning to Intel to produce chips for them. Google has reportedly already placed its orders, while Nvidia continues to test whether Intel is a good fit. Together, these developments could meaningfully help the foundry business going forward.
Analyst Reaction and Stock Levels
In the wake of the announcement, at least one analyst upgrade emerged. Bernstein raised its price target on Intel to $100, up from $65, while keeping a market-perform rating, noting that Intel stands to benefit from stronger demand. However, with the stock trading around $125 at the time, that revised price target still sits below the current trading level. Additionally, ASML — the chip equipment maker — was having a strong day on the back of the same news.
A Trading Perspective
Despite the positive momentum, one trading view framed the situation cautiously. The stock has had a very nice run, but it also hit significant resistance just above current levels and subsequently dropped fairly hard. From this perspective, the day's news and the small rally it produced present an opportunity to take a short position rather than chase the move.
The specific example trade: if the stock rallies a couple of dollars more toward $125, the plan would be to buy the July expiration 115/105 put spread, aiming to pay about $3 for it. At the time, with the stock around $121, that put spread was trading somewhere between $3.50 and $3.75. The strategy is to fade any further rally in the name.
The Broader Market Backdrop
On the wider market heading into the afternoon's FOMC decision, the expectation was that there would not be much movement on the FOMC itself. The market was seen as taking a "wait and see" stance following the large rally already in place. Geopolitical news coming out of Iran was cited as a factor the market liked, particularly for the Dow and the industrials. The strength of recent economic data was also noted as a supportive element for the market.
