Intel Foundry Lands a Major New Client Worth Watching

Last month, Intel's (NASDAQ: INTC) foundry business landed Fortinet as a client. Admittedly, since investors tend to focus on advanced nodes with near exclusivity, many of them might have missed this news.

Still, investors should probably take this news more seriously. Here's why the deal is critical to Intel Foundry and chip stock investors at large.

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The Fortinet deal and what it means to Intel

Under the terms of the agreement, Intel Foundry will manufacture its next-generation Security Processor 6, which supports the FortiGate firewall line. In this case, Fortinet provides the front-end design and the architecture. Intel will handle the back-end design, advanced packaging, and manufacturing using the Intel 4 process node.

Although numerous companies have negotiated and agreed to deals with Intel, Fortinet is the first named outside customer under Lip-Bu Tan, who became CEO in early 2025.

It takes Intel into the cybersecurity chip space, helping Fortinet shift away from Taiwan Semiconductor Manufacturing Co. (TSMC), which dominates the foundry industry with a 72% market share, according to TrendForce.

This deal makes Intel a player in the development of cybersecurity ASICs (application-specific integrated circuits). More importantly, it could also lead other cybersecurity companies to follow Fortinet's lead and choose Intel as their manufacturer, helping Intel build a niche that can further challenge TSMC.

Still, investors might struggle with whether this is directly actionable for prospective Intel shareholders right now.

In the second quarter of 2026, revenue was $16.1 billion, with Intel Foundry's business accounting for $5.8 billion of Intel's Q2 revenue. Foundry unit revenue grew 31%, just above the company's 25% target, implying that this part of the business could influence the stock price.

While that implies that the Fortinet deal should bode well for Intel stock, it is coming off a 400% gain over the last year. Past losses leave it without a meaningful price-to-earnings (P/E) ratio, though the forward P/E of 66 indicates that it has become an expensive stock.

Thus, even if this news helps the company, investors may hesitate to buy Intel shares for now despite this development.

Moving forward with Intel stock

Intel's deal with Fortinet could become a new business line for investors, and even if it may not be actionable by shareholders at this time, it could ultimately help make Intel Foundry a reason to own its stock.

Indeed, the Fortinet deal to build a cybersecurity-oriented processor could make Intel a leader in this niche of the chip industry. That could help it challenge TSMC's dominance in the foundry industry.

While that is likely bullish for Intel in the long run, Intel's high valuation could mean that little changes for the stock in the near term.

Instead, the Fortinet deal is a signal to investors to watch for other deals. Assuming Intel Foundry can continue to make agreements, especially in an industry like cybersecurity, it may become a driver for Intel stock in the coming years.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fortinet, Intel, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.