Intel Fails Broadcom Chip Foundry Test, Deepening Challenges

Intel Faces Setback, Fails Broadcom Chip Foundry Test

Intel’s foundry business faces new challenges as it reportedly failed a crucial chip manufacturing test by Broadcom, according to sources cited by Reuters.

The testing primarily involved Intel’s latest Intel 18A process technology. Broadcom had received wafers from Intel last month, but after a thorough evaluation by engineers and executives, it was concluded that the current process is not yet ready for mass production.

Exclusive: Intel manufacturing business suffers setback as Broadcom tests disappoint, sources say https://t.co/MtNaubeSMw pic.twitter.com/hURmVQnW5x

— Reuters Asia (@ReutersAsia) September 4, 2024

An Intel spokesperson stated:

“The Intel 18A process is up and running smoothly with high yield rates. We plan to begin large-scale production as scheduled next year. There is significant industry interest in Intel 18A, but we do not comment on specific customer engagements as per our policy.”

J.P. Morgan analyst Harlan Sur estimates that Broadcom’s AI-related revenue this year will reach $11-12 billion, up from $4 billion last year. Broadcom’s AI chips are primarily sold to companies like Alphabet and Meta, potentially involving collaborations with foundries like Intel or TSMC.

Recently, Intel announced disappointing second-quarter financial results, causing its market value to drop by more than 25%. The company also announced a 15% workforce reduction and cutbacks in capital spending related to factory construction.

Last week, Reuters reported that Intel CEO Pat Gelsinger and other executives plan to present a cost-cutting proposal to the board in mid-September, which may include trimming business units and teams.

Intel’s foundry business, launched in 2021, is a key part of Gelsinger’s turnaround strategy. However, the company reported a $7 billion operating loss in its foundry business, up from $5.2 billion the previous year. Intel executives expect the foundry business to break even by 2027.

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Mayank Sharma

Love to experience and learn about new gadgets and technology. New technology is not good or evil by itself. It's all about how people choose to use it!