Intel (NASDAQ:INTC) is encountering difficulties with the production yield of its latest high-performance laptop chips, according to a report by Reuters. Only a small fraction of semiconductors made using Intel’s new manufacturing technique have met the quality standards required for consumer sales.
Two insiders familiar with Intel’s test results told Reuters that the relatively low yield — the percentage of functional chips produced — could pose profitability challenges for the tech giant’s next-generation processors.
However, Reuters noted that yield rates could fluctuate as Intel continues to fine-tune its fabrication processes. Additionally, different companies use varying methods to measure yield, which adds complexity to interpreting the data.
Under the leadership of new CEO Lip-Bu Tan, Intel is shifting its strategy for its contract manufacturing unit, aiming to attract top-tier clients and rival Taiwan Semiconductor Manufacturing Company (TSMC). A key part of this pivot involves increasing production of advanced chips internally.
Intel is banking on a new manufacturing technology called 18A to drive this initiative. The company has reportedly invested billions in upgrading and expanding its fabrication facilities to support 18A production.
Although early tests of 18A technology showed disappointing results last year, Intel remains optimistic that it will be able to manufacture high volumes of its powerful “Panther Lake” chips using this process by the end of 2025.
Reuters explained that Intel usually needs yields in the 70-80% range to achieve strong profitability. Without a significant increase in yield, the company may have to sell some Panther Lake chips at reduced margins or even at a loss when they hit the market later this year.
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