Report: Intel considers moving on from 18A chip manufacturing process – News

Intel Corp. is set to revamp its contract chip manufacturing business by pivoting away from its highly publicized 18A process and switching its attention to its next-generation 14A node in an effort to win over new customers.

The company’s proposed strategic shift was first reported by Reuters and later, the German-language outlet ComputerBase, with both publications citing people familiar with new Chief Executive Lip-Bu Tan’s plans.

Such a move would represent a significant setback for the troubled chipmaker, and it comes amid a much broader overhaul that began when Tan (pictured) took over the company in March. The new CEO is struggling to reverse Intel’s fortunes, after it posted an $18.8 billion loss in 2024, by slashing jobs and flattening its corporate structure.

According to ComputerBase, the goal is to try and regain leadership in chip manufacturing and better compete with arch-rival Taiwan Semiconductor Manufacturing Co., which recently turned down proposals to create a joint venture with Intel.

If Intel does decide to write off the 18A process, it would be seen as a massive blow to Intel’s foundry strategy. The node was described as a “generational leap” for the company that would help it to match the capabilities of TSMC. It’s the first Intel node to feature technologies such as PowerVia backside power delivery and next-generation RibbonFET transistors – cutting-edge innovations that were pitched as the foundation of Intel’s much-vaunted Intel Foundry Services business.

But chipmakers have unanimously shunned Intel’s latest innovations, and Intel itself is the only relevant customer using the 18A process so far. That’s why Tan has reportedly chosen to focus Intel Foundry’s efforts entirely on the 14A process, which isn’t expected to be ready for mass production until 2027 at the earliest.

His decision wouldn’t have come lightly, for it would require Intel to write off multiple billion-dollar investments in the 18A node, an action that would upset shareholders and reduce future research and development budgets.

However, Intel’s manufacturing struggles aren’t the only problems it faces. Its ambitious plans to construct a new $28 billion chip factory in Ohio have reportedly been pushed back until 2030 at the earliest, casting doubt on its ability to lead a U.S. push to rebuild its domestic semiconductor manufacturing industry.

Sweeping changes

Since taking over in March, Tan has already made a number of drastic changes. In April, he announced a broad overhaul of the chipmaker’s corporate structure that includes an unspecified number of job reductions. That move came in the wake of reports that Intel could shed up to 20% of its staff, in addition to an earlier round of 15,000 layoffs that was announced in August 2024.

“It’s clear to me that organizational complexity and bureaucratic processes have been slowly suffocating the culture of innovation we need to win,” Tan said in a memo to employees announcing the restructuring.

In addition, Tan has also reduced the company’s operational expenses target by $500 million, while lowering its capital expenditure forecast by $2 billion.

By flattening the company’s corporate structure, Tan put Data Center and AI and Client Computing business groups under his direct oversight, saying this will help to accelerate decision-making and innovation. “I’m a big believer in the philosophy that the best leaders get the most done with the fewest people,” he said at the time.

Tan also promoted Sachin Katti to chief technology officer and chief AI officer in order to help focus on the company’s overall strategy and try to compete with Nvidia Corp. in the artificial intelligence chip market.

Holger Mueller of Constellation Research Inc. said the reports demonstrate that Tan is willing to leave no stone untouched in his quest to get Intel back on track and boost its competitiveness in the semiconductor industry.

“He’s looking at everything Intel does, and that includes chip manufacturing, which is an area where the company has struggled recently,” the analyst explained. “It will take a lot of courage to steer the company on a different course from the 18A process, as it was once dubbed as the company’s savior. But Tan needs to assess how far it can take Intel in the new AI world, and it might not have the potential to keep Intel competitive.”

Tan’s changes have been driven by Intel’s horrendous losses in fiscal 2024, which was its first annual deficit since 1986. The Intel Foundry business was one of the major reasons for its $18.8 billion net loss, shocking investors.

In addition, Intel faces external pressures. Earlier this year, the U.S. government was reportedly pressing hard for Intel to create some kind of joint venture with TSMC, but the Taiwanese chip giant ended months of speculation in April when it explicitly ruled out such a move.

“TSMC is not engaged in any discussion with other companies regarding any joint venture, technology licensing or technology,” said TSMC CEO C.C. Wei in April, a statement that forces Intel to forge its own path.

The decision to abandon the 18A process isn’t a complete surprise, as CEO of Intel Products Michelle Holthaus admitted last month that Intel was considering using its competitors’ factories in addition to its own.

Discussing the company’s upcoming Nova Lake central processing units, she said: “Yes. Of course, I want it to be on an Intel Foundry, but if it doesn’t deliver the best product, I’m not going to build it there.”

Photo: Intel