Intel’s 18A Semiconductor Process: A Turning Point for Its Foundry Business
Intel’s Foundry Business at a Crossroads
Intel Corp. is making significant strides in its foundry business, with Nvidia Corp. and Broadcom Inc. actively testing its advanced 18A semiconductor manufacturing process. This marks a crucial moment for Intel as it attempts to establish itself as a viable competitor to Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung in the contract chipmaking industry. If successful, these tests could result in high-value contracts worth hundreds of millions of dollars, bolstering Intel’s position as a leader in semiconductor manufacturing.
Intel’s 18A process represents its most advanced semiconductor manufacturing technology to date, featuring cutting-edge transistor architecture designed to rival TSMC’s most sophisticated nodes. However, as the industry closely watches these evaluations, Intel must overcome manufacturing delays, financial challenges, and skepticism from third-party chip designers.
Understanding Intel’s 18A Process and Its Market Impact
Intel’s 18A (1.8-nanometer) process is seen as a potential game-changer for the company’s foundry business. This advanced node incorporates Gate-All-Around (GAA) RibbonFET transistors and PowerVia backside power delivery, technologies aimed at improving performance, efficiency, and power consumption. These innovations position Intel as a direct competitor to TSMC and Samsung, both of which currently dominate the high-end semiconductor manufacturing market.
However, it is important to note that Nvidia and Broadcom’s current assessments are not full-scale chip production runs. Instead, these companies are evaluating test wafers to determine whether Intel’s technology meets their requirements. The outcome of these tests could influence the future of Intel’s foundry business, as major industry players decide whether to commit to large-scale production.
Intel has remained tight-lipped on specific customer engagements, with a spokesperson stating, “We don’t comment on specific customers but continue to see strong interest and engagement on Intel 18A across our ecosystem.”
AMD’s Potential Interest in Intel’s Foundry Services
Advanced Micro Devices (AMD) is also reportedly evaluating Intel’s 18A process, though it remains unclear whether the company has submitted test chips for assessment. Unlike Nvidia and Broadcom, AMD has not publicly acknowledged any plans to utilize Intel’s foundry services. When asked for comment, AMD declined to provide further details, leaving industry analysts speculating about its long-term strategy.
If AMD were to adopt Intel’s 18A process, it would mark a significant shift in the semiconductor landscape, as AMD has historically relied on TSMC for manufacturing its processors. A move toward Intel’s foundry services could signal a diversification strategy or hedging against geopolitical risks associated with Taiwan’s semiconductor industry.
Challenges Facing Intel’s 18A Manufacturing Timeline
Despite the optimism surrounding Intel’s 18A process, the company’s manufacturing timeline has faced notable setbacks. Originally, Intel planned to have contract manufacturing customers using the 18A process by 2026. However, recent reports indicate that Intel has delayed this timeline by six months due to challenges in qualifying crucial intellectual property (IP) needed by smaller and mid-sized chip designers.
Without certified IP, many potential customers will be unable to proceed with chip production until at least mid-2026, affecting Intel’s ability to onboard external clients in the near term. A company spokesperson acknowledged the delay but reaffirmed Intel’s commitment to ramping up production in the second half of 2025:
“We will begin ramping production in the second half of this year, delivering on the commitments we have made to our customers. We expect to start receiving customer designs later this year.”
Intel’s Foundry Business Faces Financial Struggles
Intel’s contract manufacturing division plays a key role in its turnaround strategy, especially as U.S. policymakers push for domestic semiconductor production to reduce reliance on foreign foundries. However, Intel’s foundry unit has struggled financially:
- Revenue Decline: In 2023, revenue from Intel’s foundry business dropped by 60%.
- Projected Losses: The company does not expect to break even until at least 2027.
- Reliance on Internal Production: Analysts estimate that Intel’s foundry business will generate $16.47 billion in revenue by 2025, but the majority of this revenue will come from Intel’s internal chip production, rather than external customers.
The lack of major third-party clients remains a key obstacle to Intel’s long-term foundry aspirations. Many semiconductor companies remain skeptical about Intel’s ability to consistently meet advanced manufacturing standards, particularly given its history of production delays.
Nvidia and Broadcom’s Tests: A Potential Turning Point
Industry analysts believe that Nvidia and Broadcom’s evaluation of the 18A process could be a game-changer for Intel. If these industry giants decide to use Intel’s foundry services, it could encourage other companies to follow suit, reducing Intel’s dependence on its own chip production for foundry revenue.
Sassine Ghazi, CEO of Synopsys, a company providing key intellectual property for semiconductor manufacturing, noted that many companies are waiting to see the results of Nvidia and Broadcom’s evaluations before making a commitment:
“Right now, there are a lot of customers waiting—I’m talking foundry customers—to see the state of Intel. Will I commit? Will I not?”
U.S. Government’s Role: Intel-TSMC Joint Venture Talks?
In a surprising development, U.S. government officials have reportedly engaged in discussions with TSMC CEO C.C. Wei regarding a potential joint venture between Intel and TSMC. These discussions also included the possibility of other chipmakers acquiring equity stakes in Intel’s foundry operations.
This development highlights growing concerns about Intel’s ability to compete independently with TSMC and Samsung. A joint venture could bolster Intel’s foundry ambitions while securing U.S. government support for domestic semiconductor production. However, such a deal would likely raise regulatory and geopolitical considerations, given the strategic importance of semiconductor manufacturing.
Key Challenges and Future Outlook for Intel’s Foundry Business
As Intel navigates these critical developments, the company faces several challenges and key decisions that will determine its future in the semiconductor industry:
- Successful Completion of Nvidia and Broadcom’s Tests
- If these companies approve Intel’s 18A process, it could attract additional customers and provide long-term revenue stability.
- Overcoming Manufacturing Delays
- Intel must resolve its intellectual property (IP) certification issues and ensure that customers can begin chip production as soon as possible.
- Financial Sustainability of Intel’s Foundry Division
- With continued losses and reliance on internal production, Intel must secure high-value third-party contracts to break even by 2027.
- Impact of U.S. Government Involvement
- A potential Intel-TSMC joint venture or government-backed semiconductor initiative could reshape the competitive landscape.
- Geopolitical and Trade Considerations
- As U.S.-China tensions impact the semiconductor supply chain, Intel must navigate complex geopolitical dynamics while maintaining global competitiveness.
Intel’s Future Hinges on Key Industry Partnerships
Intel’s 18A semiconductor process represents a pivotal moment in its efforts to revitalize its foundry business. With Nvidia, Broadcom, and potentially AMD evaluating its manufacturing capabilities, the coming months will be critical in determining whether Intel can attract major external customers or remain heavily reliant on internal chip production.
As the semiconductor industry continues to evolve, Intel’s ability to deliver on its 18A process and secure meaningful foundry contracts will shape its long-term success. Investors and industry watchers will be closely monitoring the company’s progress as it strives to reclaim its position as a leader in semiconductor manufacturing.
