Report: Intel Suffers Foundry Setback

As if Intel didn’t have enough problems, a new report claims that its chip foundry business has repeatedly failed to meet the quality needs of a key customer, Broadcom.

Intel’s turnaround strategy hinges on returning the chip-making giant to its historical strength: Making chips. It has invested billions of dollars on new foundries in the U.S. and Europe, and it’s invested billions more updating existing foundries, and it’s the biggest recipient of U.S. government loans and subsidies tied to the CHIPS act. But Intel has struggled to get this effort off the ground, and its recent financial reports have lurched between disappointing and devastating. And in the wake of the most recent quarter, after which it announced layoffs and other cost-cutting measures, investors made the firm’s stock price plummet by over 25 percent in a single day. CEO Pat Pat Gelsinger and his executive staff are expected to recommend a way forward for the company to the board of directors this month, and spinning off its foundry business is on the table.

Separate from this, Intel is also reeling from quality control problems. Aside from the ongoing chipset reliability issues I’ve pointed out in my reviews–issues that are apparently small enough that Intel has kept them out of the press–the firm’s recent Core processors are so problematic that it was forced to extend warranties and publicly admit to the issues, a rarity.

But these aren’t Intel’s only technical issues. According to a report in Reuters, the vaunted “18A” manufacturing process that Intel is counting on to return it to its previous greatness have failed every test that its customer Broadcom has made over some months. The conclusion is that 18A is not ready for high volume product, news that could derail plans its other customers–like Arm and MediaTek–have to use Intel’s production facilities. And that could send Intel into another tailspin.

“Intel 18A is powered on, healthy and yielding well, and we remain fully on track to begin high volume manufacturing next year,” an Intel spokesperson told Reuters. “There is a great deal of interest in Intel 18A across the industry but, as a matter of policy, we do not comment on specific customer conversations.”

“Broadcom is evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation,” a Broadcom statement adds.

The Reuters reports cites multiple sources, who told the publication that Broadcom doubts that Intel can successfully build chips using the complex new process, especially at high volume. Despite this, Intel says it still plans for 18A to be “manufacturing-ready” by the end of 2024 and in high production by mid-2025.