Success or failure hinges on this one move: Intel's $32 billion gamble on 18A process

Intel has begun mass production at its new chip factory in Arizona, which cost $32 billion, in an effort to regain its leadership in advanced manufacturing.

According to media reports on the 13th, Kevin O'Buckley, head of Intel's foundry division, stated that 18A is "the most advanced semiconductor manufacturing technology on Earth today," but he acknowledged that the company still needs to "earn customer trust." Analyst Ben Bajarin warned:

"At some point, they have to decide whether they can do it."

This gamble will be revealed in the next 6-8 months, as the test results from key customers like Apple, Nvidia, and Qualcomm will determine the fate of this American chip giant. If the 18A process fails to impress customers, Intel's multi-billion dollar investment in domestic chip manufacturing could be in vain. The company's foundry division is losing over $10 billion annually while carrying a net debt of $20 billion.

The U.S. government has intervened to support, converting the originally planned subsidies into equity investments, acquiring a 10% stake in Intel. Subsequently, investments from Nvidia and SoftBank further boosted confidence, leading to a more than 46% increase in Intel's stock price within a month.

Huge Investment Faces Severe Test

The 700-acre chip factory being built by Intel in Chandler, Arizona, will cost more than half of the company's revenue in 2024. Morgan Stanley analysts stated, "It's hard to assign too much value to a foundry business that loses over $10 billion a year."

The Fab 52 factory located in the park has begun production, while the unfinished Fab 62 factory is still under construction. The amount of concrete required for Fab 52 is twice that of the Burj Khalifa in Dubai, and extreme ultraviolet lithography equipment from ASML, each worth hundreds of millions of dollars, has been installed.

Former customers like Apple, Nvidia, and Qualcomm will test Intel's 18A chips in the next 6-8 months and then decide whether to re-engage. These test results are crucial for Intel, as the company needs to prove that its manufacturing processes can compete with TSMC. Analysts stated:

"If the chip performs well, it will be a positive signal to start taking Intel's foundry business seriously."

Intel engineers claim that early "yield" issues have been resolved, and the company is about to launch two new chips—Panther Lake for personal computers and Clearwater Forest for servers.

The Shift from "Too Big to Save" to "Too Big to Fail"

In the face of Intel's predicament, the U.S. government converted the originally planned subsidies into equity investments, acquiring a 10% stake in the company. Dan Hutcheson from TechInsights commented:

"Intel has transformed from 'too big to save' to 'too big to fail.'"

After the government's intervention, Nvidia and SoftBank announced investments in succession, driving Intel's stock price to surge over 50% within a month. Analysts believe that the Trump administration's pressure on large tech companies to support domestic manufacturing may also drive more customers to turn to Intel Intel must prove that the 18A process can be mass-produced in order to secure pre-orders for its 14A process planned for launch in 2028. If it fails to attract enough customers, Intel has warned that it may abandon this technology route.

The head of the company's foundry division acknowledged that, despite having advanced technology, "there is still a need to build trust with customers." In the context of TSMC's long-standing dominance in the high-end chip foundry market, Intel faces challenges not only on the technical front but also in convincing customers of its execution capabilities