Editor's take: Intel's long-running manufacturing struggles have cost it money and a CEO, highlighting deeper challenges in reclaiming leadership in advanced chip production. As it relies on TSMC for key parts and wrestles with tight yield targets, the future of its foundry business - and US semiconductor competitiveness - hangs in the balance.
Reuters reports that Intel is facing manufacturing setbacks with its next-generation Panther Lake PC silicon. Only a small percentage of chips produced on the 18A process meet quality standards. Insiders briefed on internal test data say yield was roughly 10 percent this summer – barely an improvement over the five percent figure reported late last year. Intel disputes those numbers but declined to provide its actuals.
The 18A process introduces a next-generation transistor design and a new method of delivering power to the chip. Intel aims to close the performance gap with TSMC, but some insiders say the company took on too much risk at once. One of the sources likened the effort to a "Hail Mary."
Yields can be hard to track because companies measure them differently. Generally, yield starts low and improves over time. Intel Chief Financial Officer David Zinsner confirmed last month that yields are improving and the company expects to reach production-grade levels by year-end.
"Our expectation is every month they'll get better and better, such that we're at a yield level that is good for production-level Panther Lake at the end of the year," Zinsner told Reuters. "I wouldn't say that margins are accretive even at those yield levels, so we still have to make improvement."
Panther Lake is scheduled for high-volume production in the fourth quarter, slipping behind Intel's earlier forecast for a mid-year launch. Historically, the company waits until yields reach at least 50 percent before ramping output, with profitability typically starting closer to the 70 to 80 percent range. Without a significant improvement, Intel will have to sell chips at reduced margins - or potentially at a loss.
Intel previewed several Panther Lake laptops at Computex in May and maintains the launch is on track. However, sources tinsist that the number of manufacturing defects per chip area remains roughly three times higher than what would be acceptable for mass production.
The company has poured billions into new facilities to support 18A and warned it may abandon leading-edge manufacturing altogether if it cannot attract outside customers – primarily Apple and Nvidia – to its 14A successor. Meanwhile, Intel remains reliant on TSMC to produce parts of its in-house chip designs, including the upcoming Nova Lake, underscoring the challenges it faces in restoring complete manufacturing independence.