As part of the recovery plan, Intel CEO Pat Gelsinger has launched the largest factory construction operation in the history of the chip industry, hoping to become the world's second largest chip foundry by 2030. But he missed one key element:Not enough paying customers.

Gelsinger's recovery plan hinges on his foundry project, which makes chips for other companies.He has promised Wall Street that he will begin disclosing the names of those clients this year.Even just one big brand could help investors justify a 47% rise in Intel shares over the past 12 months at a time when Intel's sales are declining and the company's once-vaunted profit margins are shrinking.

The foundry plan is Intel's biggest strategic shift in decades. From the beginning, Intel's business model has been to design and manufacture its own chips, such as the Pentium, Celeron and Xeon, which power the world's computers. But now, Intel has lost its technological advantage, leading some PC manufacturers to switch to products from rival AMD, while data center operators have even begun designing their own chips or turning to Nvidia.

Entering the foundry market is an opportunity to show the industry that Intel has restored its manufacturing capabilities. Kissinger, 62, said: "In my opinion, if we want to be big, we must also be a foundry. Currently, we are gaining some customers."

Although Intel has not disclosed the list of customers for its foundry business, it has taken some preliminary steps. Ericsson has pledged to produce some networking chips at Intel's factories. Amazon also said it was considering using Intel's factories to package chips. Qualcomm is also waiting to see Intel's chip manufacturing technology.

Now, what analysts and investors are waiting for: a flagship customer willing to pay up front to guarantee supply.If, as Kissinger said, the list will be announced this year, then there will be less than two months left.Kissinger said one customer had prepaid for future supplies but did not name the customer.

Stacy Rasgon, an analyst at research firm Sanford C. Bernstein, said: "Everyone is waiting. But even if Intel does announce the list, it will be a few years before it actually gets revenue. In short, there is a long way to go."

As we all know, Intel has dominated the chip market for decades. Today, not only is its technology lagging behind, its revenue is also lower than that of TSMC and Samsung Electronics, and its market value is only a fraction of Nvidia's.

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Aim to achieve technological leadership by 2025

Based on Kissinger's plan, Intel will regain its technological leadership by 2025. As part of its comeback plan, Intel is building factories in Arizona, Ireland, Israel and Germany. Its biggest bet is a new factory in Ohio that is expected to be the largest in the industry.

Obviously, this was a costly operation. Upgrading and expanding factories wiped out Intel's profits and drained cash reserves that once led the industry. Kissinger also knows that it is not easy to surpass TSMC and convince potential customers of Intel's manufacturing technology.

He said: "We know very well that TSMC and Samsung are really good at this. They have been doing it for 30 years, and we have only two years. There is still a lot to learn." In 2021, Kissinger was appointed at the critical moment and returned to the company after being away from Intel for 10 years as CEO, leading Intel to start a new round of transformation.

But on the bright side, demand for state-of-the-art chip production will only continue to grow. Moreover, customers also want to diversify their suppliers and not be too concentrated.

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Who will be Intel's foundry customers?

So, who will be Intel's foundry customers?SanfordC. Bernstein analyst Stacy Rasgon said some investors hoped it would be Nvidia. Nvidia CEO Jensen Huang has also stated that he is open to using Intel foundry.

Intel's long-time rival AMD may also become a customer, but it's highly unlikely. As early as more than ten years ago, AMD gave up its independent production of chips. Like Nvidia, AMD outsources manufacturing to TSMC. Recently,When asked about the possibility of using Intel foundry, AMD CEO Lisa Su tactfully said that it is a pleasure to cooperate with TSMC.

Chris Caso, an analyst at research firm Wolfe Research, believes that it is easier for Intel to get customers like Amazon, Google or Microsoft because they have no competition with Intel.But no matter which big customer it is, it needs assurance from Intel that there will be no mistakes in manufacturing.

ChrisCaso said: "Intel's challenge is to prove to these customers that Intel's manufacturing capabilities have recovered. After all, these customers are betting on their own business because TSMC has always been reliable."

Gelsinger believes he is convincing the naysayers that Intel is making a comeback. The rebound in the company's stock price this year has also verified this. But he also acknowledged that Intel still needs to win over a major customer.

"Ultimately, it will come down to whether Nvidia, Amazon, Google, Microsoft, Qualcomm or Apple believe they can build better products with Intel," he said.

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