Intel's key technology, which is being developed to revitalize its dominance in chip manufacturing, is facing significant setbacks.
According to media reports on August 5, the 18A process used to produce Intel's next-generation laptop chip &#34;Panther Lake&#34; has been experiencing low yield rates (the proportion of qualified chips in total production). This means that despite Intel's investment of billions of dollars in research and development and factory construction, its most advanced internal chips may struggle to achieve profitable mass production in the short term.
This development poses a direct blow to Intel's revival plan. The company had previously promised investors that the 18A process would enter mass production as scheduled in 2025, and hoped to attract external customers by successfully manufacturing the advanced self-developed chip &#34;Panther Lake,&#34; thereby establishing credibility for its newly launched foundry business.
Intel's Chief Financial Officer David Zinsner acknowledged in an interview that the production of this chip is still in the &#34;initial ramp-up phase,&#34; and he expects yield rates to improve by the end of the year. However, he also admitted that even if yield rates improve by then, profit margins may not turn positive. This means Intel must achieve a significant leap in yield rates before the chip is launched, or it risks selling at a loss.
<h2>Low Yield Rate Dilemma</h2>
Yield rate is a core indicator of chip manufacturing efficiency and profitability. According to media reports citing two insiders familiar with Intel's testing data since the end of last year, the yield rate of the &#34;Panther Lake&#34; chip using the 18A process is far from ideal. One of the sources stated that as of this summer, the yield rate had only increased from about 5% at the end of last year to around 10%.
The aforementioned sources added that relative to industry standards, the defect density of the &#34;Panther Lake&#34; chip is approximately three times the acceptable level for initiating mass production. Reports indicate that three sources pointed out that Intel's past goal was to enter mass production only after the yield rate exceeded 50% to avoid damaging profit margins, and typically, a yield rate of 70% to 80% is needed to achieve substantial profits.
In response, Intel's CFO David Zinsner disputed the specific yield rate figures, stating that &#34;the yield is better than that,&#34; but he did not provide exact data. In an interview on July 24, he stated:
<blockquote>
&#34;Our expectation is that the yield will improve month by month to reach a level suitable for mass production of Panther Lake by the end of the year.&#34;
</blockquote>
However, he simultaneously warned:
<blockquote>
&#34;I wouldn't say that even at that yield level, profit margins will improve, so we still need to make improvements.&#34;
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In a statement on July 30, Intel reiterated that the &#34;Panther Lake&#34; project is &#34;completely on track&#34; and stated that its &#34;performance and yield trajectory give us confidence that this will be a successful launch.&#34;
<h2>The High-Stakes Technology Gamble of &#34;Key Investment&#34;</h2>
The predicament Intel faces with the 18A process stems from its one-time introduction of multiple unverified new technologies, which is a high-risk technology gamble. According to three sources, to quickly catch up with TSMC's technological advantage, Intel has integrated next-generation transistor designs and a new feature that can more efficiently power the chips in the 18A process.
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This aggressive strategy, while aimed at achieving a technological leap, also brings significant manufacturing risks due to its complexity. A person familiar with the testing data described this move as a &#34;Hail Mary,&#34; suggesting that its overly ambitious timeline could lead to failure.
Although Intel announced the start of &#34;risk production&#34; for the &#34;Panther Lake&#34; chip in April this year, production issues still persist. If it cannot significantly improve yield rates before the product launch in the fourth quarter, Intel may be forced to sell some chips at lower profit margins or even at a loss.
<h2>Impact on the Future of Foundry Business</h2>
The success or failure of &#34;Panther Lake&#34; is directly related to the future of Intel's foundry business. Intel's goal is to establish a contract manufacturing division that can compete with TSMC, in addition to its core business of designing and producing chips. Successfully mass-producing &#34;Panther Lake&#34; will be seen as the best proof of its 18A process capabilities, thereby attracting external customers.
Reports indicate that new CEO Lip-Bu Tan is actively leveraging his connections in the supply chain to help improve chip yield rates. However, challenges remain severe. Intel has previously warned that if its next-generation 14A process cannot secure external foundry business, the company may completely exit the advanced manufacturing sector.
Currently, Intel still relies on TSMC for the production of some self-developed high-end chips. A company executive stated in June that the &#34;Nova Lake&#34; chip, planned for release after &#34;Panther Lake,&#34; will also partially utilize TSMC's process. Intel still has a long way to go in revitalizing advanced chip manufacturing in the U.S. and narrowing the technological gap with industry leaders

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Intel's key 18A process for manufacturing the next-generation laptop chip "Panther Lake" is facing setbacks, with its yield far below the level required for profitable mass production. This will directly impact Intel's revival plan and poses a threat to its goals of attracting external customers and establishing credibility in the foundry business

- Intel is facing significant setbacks in its efforts to regain dominance in chip manufacturing, particularly with the 18A process for its next-generation "Panther Lake" laptop chips, which has low yield rates.  
- Despite investing billions, the yield has only improved from about 5% to 10%, far below the industry standard needed for profitable mass production.  
- The success of "Panther Lake" is crucial for Intel's contract manufacturing ambitions, as failure could jeopardize its competitive position against TSMC and its future in advanced manufacturing.

Report: Key process technology encounters obstacles, Intel's next-generation PC chip progress is concerning