Nvidia Corp and Broadcom Inc have recently started testing chips using Intel Corp's advanced manufacturing process, signifying pivotal steps for both the companies and Intel, which has been trying to establish itself as a player among major chip manufacturers.
Reports filed by Reuters indicate both companies' engagement with Intel's 18A process, which is adeptly suited for crafting advanced artificial intelligence processors and complex chips. This testing could lead to substantial manufacturing contracts, renewing hope for Intel's lagging foundry business.
On March 3, 2025, Nvidia's shares fell by 4.7% to $119.08, and Broadcom's dropped 2.4% to $194.72 amid anxiety stemming from these developments. Conversely, Intel's stock climbed by 3.3%, reaching $24.51, as investors reacted to the information.
For years, Intel has been attempting to secure major chip design clients without much success, struggling to find footing against competitors like Taiwan Semiconductor Manufacturing Co (TSMC). Nonetheless, the interest showcased by Nvidia and Broadcom could signal early confidence from significant tech players. An Intel spokesperson stated, "We don't comment on specific customers but continue to see strong interest and engagement on Intel 18A across our ecosystem."
Although the testing by Nvidia and Broadcom reflects cautious progress, analysts assert the need for Intel's manufacturing capabilities to demonstrate reliability and success before securing definitive contracts, which could involve hundreds of millions of dollars. These tests are exploratory rather than full production runs, aimed at assessing Intel's technology's behavior and capabilities, clarifying potential hurdles before committing to mass production.
An additional layer of uncertainty surrounds Advanced Micro Devices (AMD), which is also evaluating the 18A process but has not fully engaged with Intel. AMD's level of commitment remains ambiguous. While Intel's 18A faces delays, the scrutiny facing the chipmaker raises concerns about whether it can compete effectively with TSMC.
Reports claim Intel's foundry revenue is projected to remain meager until at least 2027, reflecting wider struggles with executing its manufacturing plans. The success of Intel's foundry business, once heralded as pivotal by former CEO Pat Gelsinger, is threatened by delays and internal challenges, culminating in Gelsinger's dismissal from his position last December.
Intel's foundry ambitions include commitments made to tech giants like Microsoft and Amazon to manufacture chips using the 18A process. Nevertheless, details surrounding these agreements are sparse, with uncertainty over their volume and impact.
Industry experts have been keeping close tabs on Intel's foundry progress, which they believe is fundamental to maintaining U.S. competitiveness in semiconductor manufacturing. One industry figure described the current environment as tenuous, noting, "Right now, there are a lot of customers waiting - I'm talking foundry customers - to see the state of Intel. Will I commit? Will I not?"
Some sources familiar with the state of affairs indicate the delays are tied to qualifying the core intellectual property necessary for the 18A process. This aspect has reportedly pushed timelines back another six months. Experts indicate the qualification process is increasingly important to not only retain prospective customers but also boost confidence within the semiconductor ecosystem.
With Intel calculating its strategy, one must ask: can it garner sufficient trust from major designers like Nvidia and Broadcom? While the testing signals potential interest, significant contracts would hinge on Intel’s ability to display reliable production standards. The chip powerhouse is determined, asserting, "We will begin ramping production in the second half of this year, delivering on the commitments we have made to our customers." Yet, until chip designers witness tangible successes, skepticism about Intel's manufacturing claims is likely to remain.
The testing from companies like Nvidia, Broadcom, and AMD points to the growing complexity and competition within the semiconductor industry. Each of these firms is weighing their options closely, considering the rising stakes and necessity for advanced manufacturing capabilities to cater to needs driven by AI and other innovations.
Intel’s stronghold amid potential partnerships with heavyweight customers may soon rely on the successful rollout of its 18A process. Until those chips materialize, all parties must navigate the delicate balance between ambition and caution within the ever-evolving chip manufacturing sector.