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Intel Faces Setback as Broadcom Chip Manufacturing Tests Fall Short

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Intel’s efforts to revitalize its contract manufacturing business have suffered a blow after tests with chipmaker Broadcom yielded disappointing results, sources revealed. Broadcom had sent silicon wafers through Intel’s cutting-edge 18A manufacturing process, which was intended to demonstrate the viability of the technology. However, after receiving the wafers last month, Broadcom’s engineers concluded that the process was not yet suitable for high-volume production. This setback poses a significant challenge to Intel’s turnaround strategy led by CEO Pat Gelsinger, who launched the contract manufacturing division in 2021 as a cornerstone of the company’s recovery.

Despite the setback, Intel remains optimistic. The company asserted that the 18A process is “healthy and yielding well,” with plans for full-scale production on track for next year. Broadcom, on the other hand, stated that it is still evaluating Intel’s offerings and has yet to make a final decision on a potential partnership.

Intel has been under significant pressure to secure major contracts with customers like Nvidia and Apple, especially as it faces mounting losses in its foundry business, which posted a $7 billion operating loss in the last quarter. The company aims to break even by 2027, but setbacks like the one with Broadcom complicate its path forward.

The foundry business, a critical part of Intel’s $100 billion expansion strategy, is integral to filling capacity at its newly constructed facilities in the U.S. However, Intel’s struggles to achieve viable yields with its advanced processes could hinder its ability to attract customers and compete with established giants like Taiwan Semiconductor Manufacturing Co. (TSMC).

Broadcom’s decision to test Intel’s 18A technology came amidst the chipmaker’s growing focus on AI hardware, with significant contracts from companies such as Google and Meta. However, concerns about defects on the wafers and the quality of chips produced by Intel’s process have made Broadcom cautious about committing to the new manufacturing technology.

Intel has pledged to be manufacturing-ready by the end of this year for its own chips, with plans to begin high-volume production for external customers in 2025. However, with high stakes and complex challenges ahead, Intel’s ability to turn its foundry business around remains uncertain.

 

Qualcomm Explores Acquiring Intel’s Chip Design Business Amid Restructuring Efforts

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Qualcomm has been exploring the possibility of acquiring segments of Intel’s chip design business, sources familiar with the situation revealed. The mobile chipmaker, known for its smartphone chips and major clients such as Apple, is reportedly interested in Intel’s client PC design business. This move comes as Intel struggles with cash flow and looks to divest certain business units. Qualcomm’s interest appears to focus primarily on the PC chip design sector, rather than Intel’s server segment, as it aligns better with Qualcomm’s portfolio.

Intel recently experienced significant financial setbacks, including an 8% drop in PC client business revenue, layoffs, and a pause in dividend payments. Qualcomm’s plans to purchase parts of Intel have been under consideration for several months, though no official approaches or agreements have been made. While Qualcomm and Intel both declined to comment on the potential acquisition, sources indicated that these exploratory talks are ongoing and subject to change.

Intel, which is facing pressure to streamline its operations, is weighing options to reduce costs, including the possible sale of its programmable chip unit, Altera. The company remains committed to its PC business, particularly with new AI-focused chips like Lunar Lake. Despite its challenges, Intel continues to innovate, recently launching a PC chip with AI performance enhancements. Qualcomm, meanwhile, posted $35.82 billion in revenue last year, indicating its financial strength to pursue potential acquisitions.

Asian Chip Stocks Plummet Following Nvidia’s Wall Street Sell-off Amid Antitrust Probe Concerns

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Asian semiconductor stocks faced significant declines on Wednesday after Nvidia’s sharp 9% drop on Wall Street overnight. This followed concerns about the U.S. economy and an antitrust investigation involving Nvidia. The sell-off hit major players across Asia, with SK Hynix falling over 6%, Samsung Electronics down 2.6%, and TSMC dropping 4.3%. Japan’s Tokyo Electron and Advantest also suffered heavy losses, reflecting the broader impact of Nvidia’s slump, which erased $279 billion from its market cap. The downturn highlights the global ripple effect of Nvidia’s performance in the semiconductor sector.