The Intel story I mentioned yesterday has grown legs.
Intel’s advanced 18A chipmaking process has encountered issues, as tests with Broadcom’s silicon wafers revealed it is not ready for high-volume production. This setback comes amid Intel’s financial struggles, including $1.6 billion in losses and significant layoffs. Despite these challenges, Intel maintains that the 18A process is healthy and on track for production next year.
Gizmodo looked at Intel’s Lunar Lake chips, now branded as Intel Core Ultra 200V, aim to enhance power efficiency and performance compared to previous models, boasting a 40% reduction in PHY power. The lineup includes various models, with the Ultra 9 288V reaching speeds of 5.1 GHz. While Intel claims improved AI processing capabilities, the focus is on integrated graphics performance and battery life, which still lags behind ARM competitors. The chips are set for preorder with availability on September 24, and Intel emphasizes their x86 architecture’s advantages over ARM in gaming and application support.
These issues impact the Biden-Harris administration’s strategy for a US chipmaking renaissance, which is in jeopardy due to Intel’s financial struggles. These struggles raise concerns about the company’s ability to access a $20 billion subsidy package and potentially undermine the government’s industrial policy goals, including securing advanced chip supplies for the Pentagon.
And Reuters, too, picked it up; Intel CEO Pat Gelsinger and executives plan to present a strategy to the board in mid-September aimed at cutting costs and shedding non-essential assets, including the potential sale of the Altera programmable chip unit. The proposal may also involve reducing capital spending, including pausing a $32 billion factory project in Germany. Intel is facing significant financial challenges and has engaged Morgan Stanley and Goldman Sachs for advisory support on asset sales.
Why do we care?
So, Intel is having more troubles with their chips, and the ones they are making are pulling back on AI promises, right at a time when the market is looking for AI capabilities. And the situation is so bad they may not be able to take advantage of investment dollars. At some point, the conversation has to turn to leadership as the core problem.