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Intel’s contract manufacturing business has failed tests with chipmaker Broadcom in a blow to the company’s turnaround efforts.
The tests conducted involved sending silicon wafers — the foot-wide discs on which chips are printed — through Intel‘s most advanced manufacturing process known as 18A, according to sources, with Broadcom receiving the wafers from Intel last month.
Once the results had been studied by engineers and executives the company concluded that the manufacturing process is not yet viable to move to high-volume production.
A spokesperson for Broadcom said the company is “evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation.”
As part of a disastrous second-quarter earnings report that resulted in a loss of more than a quarter from the company’s market value, Intel cut its workforce by 15%, and reduced its capital spending related to factory construction.
A statement from Intel reads: “Intel 18A is powered on, healthy and yielding well, and we remain fully on track to begin high volume manufacturing next year.
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By GlobalData“There is a great deal of interest in Intel 18A across the industry but, as a matter of policy, we do not comment on specific customer conversations.”
Intel reported a $7bn operating loss for the foundry business, wider than the $5.2bn in losses the previous year.
Executives expect the contract chip business to achieve break-even in 2027.
Intel released its manufacturing tool kit for its 18A process to other chipmakers over the summer, with the company planning to be manufacturing-ready by the end of 2024 for its own chips.
The company also expects to begin high-volume production for external customers in 2025.
Intel has committed to around $100bn of expansion and new factory construction at several sites in the US with a critical part of the company’s expansion being to attract big customers such as NVIDIA or Apple.