Intel’s ambitious plan to reassert itself as a global leader in chip manufacturing and challenge Taiwan’s TSMC is facing renewed turbulence. 

The company’s long-touted 18A process node, central to its effort to revive high-end semiconductor production in the U.S., has run into significant yield problems. Its most recent setbacks have cast doubt over the viability of its next-generation laptop chip, Panther Lake.

Sources familiar with the matter told Reuters that only a small percentage of Panther Lake chips produced using the 18A process have been good enough to supply to customers.

According to the sources, for Intel to hit considerable profitability, the yields must reach 70% to 80%. Intel’s current yield rate is reportedly well below that threshold, despite plans to ramp Panther Lake into volume production by the fourth quarter of 2025.

Last month, Intel’s CFO David Zinsner reportedly said in an interview that yields start off low and improve over time.

Intel’s foundry dream is on the brink

Intel’s 18A process has been positioned as the cornerstone of the company’s foundry comeback. The goal is to rival TSMC and to establish Intel Foundry Services (IFS) as a viable alternative for global chip designers.

Intel has poured billions into building and upgrading facilities to support 18A production, hoping that successfully delivering Panther Lake in-house would showcase its capabilities to prospective foundry clients.

A statement shared on behalf of Intel on July 30 pushed back against the concerns: “Our performance and yield trajectory gives us confidence this will be a successful launch that further strengthens Intel’s position in the notebook market.”

The stakes are high on the 18A chip

Panther Lake is not just another chip; it’s a litmus test for whether Intel can revive its leadership in advanced manufacturing. The company’s financial model for such chips depends on hitting critical yield thresholds. According to internal sources cited by Reuters, Intel historically avoids full-scale production until yields exceed 50%, given the risk of denting margins.

If Panther Lake remains stuck at suboptimal yield levels, Intel may face the tough choice of selling chips at lower profit margins or even at a loss. Compounding the issue is investor pressure to prove that Intel Foundry Services can attract and retain external customers. Without a compelling demonstration of 18A’s maturity, that ambition may stall.

The risks are so stark that Intel has reportedly considered pivoting to its 14A node. The successor to 18A which is still in early development.

Intel’s future is contingent on partner commitment

However, Intel’s CEO Lip-Bu Tan stated that their investment in 14A will be based on customer commitments; therefore, if no major customer materializes, the succession may never happen, and even worse, it may result in Intel exiting the chip manufacturing business.

All of this comes amid broader industry dynamics. TSMC remains the dominant player, capturing over 60% of the global foundry market share. Also, Samsung still presents a competitive alternative to Intel in the foundry space.

For Intel, the Panther Lake moment is shaping up to be an inflection point. Either 18A proves viable and buys the company time to court new customers and refine 14A, or it becomes another chapter in Intel’s long struggle to catch up.

Intel insists the launch is still “fully on track.” But with the clock ticking, yields stalling, and rivals advancing, the company’s foundry dreams may be nearing a make-or-break moment.

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