As Intel comes off its steepest stock drop since the 1970s due to a worsening outlook for the PC market, the chipmaker is facing intensifying pressure to get its flailing foundry business off the ground.

It’s been an elusive task for Intel. The company has spent half a decade, and a good chunk of its $108 billion in capital expenditures over that stretch, trying to challenge Taiwan Semiconductor Manufacturing Co. But it still has no marquee customer for its most advanced chips and is primarily manufacturing chips for its own products.

Wall Street is losing patience. After the U.S. government took a 10% stake in Intel in August 2025, and Nvidia followed with a $5 billion investment, the stock started to shoot up, ultimately rising sixfold over 10 months before peaking in June. Intel was finally finding its niche in the artificial intelligence boom, delivering central processors used for agentic AI, while optimism simultaneously grew over its fab aspirations.

Intel’s story took a dramatic turn for the worse on Thursday, when the company said revenue this quarter will be between $1 billion and $2 billion shy of analysts’ estimates as the PC market continues to suffer from soaring costs for memory and other components. Intel still counts on its PC segment for roughly half of its revenue, and consumers are increasingly choosing not to upgrade.

The stock plummeted 29% on Friday, its worst day since the 1970s, capping off a 45% plunge in October, the steepest monthly drop on record, according to FactSet. It’s down another 8% in Monday trading.

Intel’s investments in the future are supposed to be paying off. CEO Lip-Bu Tan said he sees the global market for server processors increasing as much as five times over the next five years to about $200 billion. Intel’s data center business recorded 78% growth in the third quarter from a year earlier to $7.3 billion.

However, Intel said it can’t make enough chips to fill demand, pointing to industrywide supply constraints for wafers, substrates and memory, many of the same factors hurting PC sales.

That’s forcing Tan to make some hard choices. In response to the capacity shortage, Intel said it’s shifting some Oregon factory capacity away from making wafers for its advanced 18A chips to make more wafers on an older node, known as Intel 3, used for its data center products.

Intel is counting on 18A to attract outside foundry customers, so the shift in resources could complicate that effort. David Yoffie, a Harvard Business School professor who previously spent almost three decades on Intel’s board, said the latest moves are hardly welcoming to prospective foundry customers.

“They’re concerned that if Intel doesn’t actually have excess capacity beyond its own demand, that they’re just not a very credible supplier,” Yoffie…