Another heavy blow! Intel's latest manufacturing process failed to pass Broadcom's test

As one wave subsides, another rises.

After a sharp drop in stock price and being considered for removal from the Dow Jones Industrial Average, the company faces another blow: it is reported that the company's latest 18A manufacturing process failed to pass Broadcom's testing, making the prospect of turning its contract manufacturing business from loss to profit even more uncertain.

According to the latest report from Reuters, sources revealed that Broadcom processed silicon chips through Intel's most advanced 18A manufacturing process during testing. After retrieving the silicon chips from Intel last month, Broadcom's engineers and executives, upon studying the test results, concluded that this manufacturing process is not yet suitable for mass production.

A spokesperson for Broadcom stated that the company is "evaluating the products and services from Intel's foundry, and no final conclusion has been reached yet." According to insiders, Broadcom's engineers still have doubts about the feasibility of this process, which may be related to the number of defects on the wafers or the quality of the chips. The ability to improve the yield of the wafers is crucial for achieving large-scale production.

In response, Intel stated in a statement: "Intel's 18A process is in operation, running well with good yields, and we still plan to start mass production next year. Although the industry is interested in the 18A process, we will not comment on specific customer discussions for policy reasons."

Intel's contract manufacturing business was launched in 2021 and is one of the key strategies for CEO Pat Gelsinger to turn the company around. However, the business has already incurred losses of $7 billion, higher than the $5.2 billion in the same period last year. While executives expect the contract business to break even by 2027, this test failure has cast a shadow over that goal.

The test failure seems to have hit Intel particularly hard, especially as the company's overall business faces significant challenges. In the second quarter of this year, Intel released disappointing financial reports, announcing a 15% workforce reduction and cuts in capital expenditures related to factory construction. Gelsinger subsequently launched a $10 billion cost-saving plan.

Since the beginning of this year, Intel's stock price has fallen by nearly 60%, making it the worst-performing stock in the Dow, with the company's market value shrinking by more than a quarter, returning to levels seen over a decade ago