Intel Just Secured a Huge Customer for Its Foundry Business

Intel's foundry business landed its first publicly named customer, Fortinet, marking a critical validation for the chipmaker's contract manufacturing strategy. The foundry division posted $5.8 billion in Q2 revenue, up 31% from the prior year, but remains deeply in the red with a $2.1 billion quarterly loss.

The Fortinet win comes as Intel attempts to compete with TSMC and Samsung in third-party chip manufacturing, a cornerstone of CEO Pat Gelsinger's turnaround plan. Despite the operational progress, valuation concerns are mounting. INTC shares have surged 150% year-to-date, pushing the forward price-to-earnings multiple above 100—a level that suggests the foundry momentum and recent government subsidies may already be fully reflected in the stock price.

Analysts warn that the extreme valuation leaves little room for execution missteps, even as the business fundamentals show improvement. The foundry segment's continued losses underscore the capital intensity and long path to profitability in the contract chip manufacturing business.