Can Intel’s 18A Break TSMC’s 2nm Stronghold?

Intel (NASDAQ:INTC) has been going all-in to reinvent itself as a global foundry powerhouse, just as the race for next-generation 2-nanometer (nm) chips is heating up with its 18A process at the center of its strategy. Over the past four years, the company has invested over $90 billion into capital spending aimed at building out its foundry business and catching up with TSMC and Samsung. The stakes are high. The foundry business lost nearly $13 billion last year, and Intel’s stock remains down nearly 50% from its 2024 highs. So how does Intel’s new tech stack up versus peers.

Process Nodes And Intel’s 18A Progress

In chip manufacturing, “nm” refers to the process node size in nanometers. Smaller nodes generally mean more transistors can be packed into a given area, which translates into improved performance, better energy efficiency, and the ability to support more complex designs. This is particularly important for high-performance applications such as AI, smartphones, and advanced server workloads. That said, moving to smaller nodes is an expensive and complex process. Yield rates tend to be lower in the early stages, and the cost of building and equipping fabs for such advanced production is very high.

Intel is hoping that its new 18A process, which uses 1.8nm technology, is currently in risk production, where early batches are used to test and refine the manufacturing process ahead of volume production. Laptops powered by 18A-based processors are already being sampled with OEMs. The process produces chips with technologies including RibbonFET gate-all-around transistors and PowerVia backside power delivery, allowing for smaller transistors that boost performance and power efficiency. PowerVia could offer tangible advantages in AI as well as high-performance computing workloads.

Can Intel Challenge TSMC?

Intel’s 18A rollout is happening just as its competitors hit their stride. TSMC, the dominant foundry player, which holds over two-thirds of the broader foundry market, will remain the leader in the 2nm era by a large margin. TSMC will start mass production of its 2nm process in the second half of 2025 at its Taiwan fabs. TSMC’s 2nm process marks its first implementation of gate-all-around (GAA) transistor architecture, offering 10% to 15% better performance and up to 30% lower power consumption compared to its 3nm node. TSMC has been a master of manufacturing as well. Per the Taiwan Economic Daily, yields on the 2nm process currently stand at 60%, which means that out of every 100 dies cut from a silicon wafer, 60 of them pass quality control standards. That’s an impressive number. Some reports back in March estimated that Intel was only seeing yields of between 20% to 30% on its 18A process. Samsung was reportedly seeing 40% yields on its competing process.

TSMC’s client base is also massive and loyal, with key customers like Apple and AMD already signed on to adopt its 2nm process. Even Intel is hedging its bets, tapping TSMC as a second source for some of its own upcoming Nova Lake desktop processors, expected in 2026. Counterpoint Research estimates that TSMC could reach full utilization of its 2nm capacity by the fourth quarter of 2025.

Now, Intel claims the 18A process will offer higher performance and lower power consumption versus TSMC’s competing node. However, TSMC’s chips are still likely to lead in terms of density as well as cost. Adding to Intel’s challenges, the company has faced repeated delays in delivering new nodes, and its 18A process has already seen some external customers pull out following early trial production, leading to weaker-than-expected demand. Meanwhile, TSMC has the scale, ecosystem, and a vast list of loyal customers who will readily adopt its 2nm technology, and this could make things a bit more tricky for Intel.

Not only has Intel stock been a weak performer, its annual returns have been considerably more volatile compared to the S&P 500. Returns for the stock were 6% in 2021, -47% in 2022, 95% in 2023, and -60% in 2024. In comparison, Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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