September 4, 2024 Intel’s contract manufacturing business has encountered a major setback after silicon wafers produced for Broadcom failed to meet expectations during recent tests. This failure has raised concerns about the viability of Intel’s advanced 18A manufacturing process, which is crucial for the company’s strategic turnaround plan under CEO Pat Gelsinger. Intel’s foundry business, a key component of its growth strategy, has already reported significant financial losses, totaling $7 billion last year. Despite these challenges, Intel remains committed to launching high-volume production by 2025, aiming to attract large clients to its newly expanded facilities.

Intel’s contract manufacturing business was launched in 2021 as a part of CEO Pat Gelsinger’s turnaround strategy, aiming to regain its foothold in the chip-making industry. Broadcom’s negative test results are a significant blow to this strategy, especially as Intel plans to attract major clients like Nvidia and Apple to fill its expanded manufacturing capacity.

The setback with Broadcom underscores the challenges Intel faces in achieving its ambitious goals. Moving a chip design from one manufacturing process to another is complex and time-consuming, and Broadcom’s engineers reportedly had concerns about the viability of Intel’s process, particularly regarding the quality and defect rates of the chips produced. These issues could hinder Intel’s ability to secure large orders from potential clients, a critical factor for filling its newly constructed and planned manufacturing facilities. Despite these hurdles, Intel remains focused on its roadmap, aiming to be “manufacturing-ready” by the end of 2024 and starting high-volume production for external customers in 2025.