Intel has recently announced some significant wins for its Intel 18A process and advanced packaging services. The company aims to regain its manufacturing advantage by launching five process nodes within four years, culminating with the Intel 18A process in late 2024. While specific details about the customers remain undisclosed, Intel has secured a major unnamed customer for the Intel 18A process, and that customer has made a substantial prepayment. Additionally, Intel has signed contracts with two more customers for the Intel 18A process, both focused on high-performance computing. Furthermore, negotiations with another major customer are ongoing, with expectations of finalizing the deal by the end of the year.

It's important to note that revenue from the Intel 18A process is not expected until 2025 at the earliest. However, Intel is already generating foundry revenue through its advanced packaging services. In the third quarter, the company's foundry business earned $311 million in revenue, a remarkable 299% year-over-year increase, primarily driven by higher packaging revenue.

Intel's advanced packaging services have gained significant interest from leading AI chip companies, mainly due to the demand for advanced chips, including AI accelerators. These chips require packaging technology that goes beyond the traditional methods used for decades. TSMC, the market leader in the foundry industry, has encountered difficulties in meeting the rising demand for AI chips' advanced packaging capacity. This challenge has provided Intel with an opportunity to capture a share of the market. Intel has already won advanced packaging deals for two AI chip designs during Q3 and is actively negotiating with six additional customers. The company anticipates securing multiple new deals before the end of the year. Intel considers advanced packaging as an entry point for future foundry customers, as it allows chip designers to become familiar with Intel Foundry's capabilities and potentially transition into full-blown foundry customers.

To succeed in the foundry business, Intel must deliver on its manufacturing promises and timelines. Thus far, the company appears to be on track. The Intel 4 process is ready, and Intel's own Meteor Lake PC chips are scheduled to launch using this process in December. The Intel 3 process, expected to power Sierra Forest and Granite Rapids server CPUs in 2024, is on schedule to be manufacturing-ready by the end of this year. The Intel 20A process, planned for Intel's future Arrow Lake PC chips, is also on track to be ready in the first half of 2024. As for the Intel 18A process, which could provide Intel with a manufacturing lead, it is projected to be ready before the end of 2024.

Intel has faced previous manufacturing delays, which may have caused hesitation among potential foundry customers. However, if the company can consistently deliver its process nodes according to its roadmap, any concerns from chip designers should diminish. Assuming the Intel 18A process outperforms competitors' offerings upon launch, Intel's foundry revenue is expected to experience rapid expansion starting in 2025 and beyond.