By Jeffrey Dastin and Max A. Cherney
SAN FRANCISCO (Reuters) -The manufacturing course of that Intel hoped would pave the best way to successful manufacturing offers and restore its edge in churning out high-end, high-margin chips is dealing with an enormous hurdle on high quality because it places newer applied sciences to the take a look at, two folks briefed on the matter informed Reuters.
For months, Intel (INTC) has promised buyers it could improve manufacturing utilizing a course of it calls 18A. It spent billions of {dollars} growing 18A, together with the development or upgrades of a number of factories, with the purpose of difficult Taiwan’s chipmaking heavyweight, TSMC. Intel desires to spherical out its enterprise designing chips that it largely makes in-house and TSMC helps it produce, with a contract manufacturing enterprise that may compete with this key provider. However whether or not Intel revives superior chip manufacturing within the U.S. and will get its contract foundry on stable footing is determined by closing the know-how hole with TSMC.
Early exams disillusioned prospects final 12 months, however Intel has stated its 18A is on observe to make its “Panther Lake” laptop computer semiconductors at excessive quantity beginning in 2025, which embody next-generation transistors and a extra environment friendly approach to ship energy to the chip. The chipmaker has hoped that producing such a complicated in-house chip would develop exterior curiosity in its foundry, at a time when new CEO Lip-Bu Tan has explored a significant shift to course-correct that fledgling enterprise, Reuters beforehand reported.
But solely a small share of the Panther Lake chips printed through 18A have been adequate to make accessible to prospects, stated the 2 folks, who had been briefed on the corporate’s take a look at knowledge since late final 12 months. The sources spoke on situation of anonymity as a result of Intel didn’t authorize them to reveal such info.
This share determine, referred to as yield, means Intel might wrestle to make its high-end laptop computer chip profitably within the close to future.
Yield might inch up or down as a foundry optimizes its manufacturing course of. Firms additionally calculate yield in a wide range of methods, which may make this vital knowledge a transferring purpose submit, the 2 folks and two further sources with information of Intel’s manufacturing operation stated.
Yields usually “begin off low and enhance over time,” Intel’s Chief Monetary Officer David Zinsner informed Reuters in a July 24 interview.
For Panther Lake, “it is early within the ramp,” he stated. In a press release on July 30, Intel added: “Our efficiency and yield trajectory provides us confidence this will likely be a profitable launch that additional strengthens Intel’s place within the pocket book market.”
Intel prior to now has aimed for a yield north of fifty% earlier than ramping manufacturing as a result of beginning any earlier risked damaging its revenue margin, three of the sources stated.
Intel sometimes doesn’t make the lion’s share of its revenue till yields attain roughly 70% to 80%, key for a chip as small as Panther Lake the place many defects would make it a troublesome promote, the three folks stated. Revenue additionally flows from market expansions and build up manufacturing facility output, Intel stated.
An immense yield improve could be a tall activity by Panther Lake’s fourth-quarter launch, the 2 folks with information of Intel’s manufacturing operation stated. However with out such a leap, Intel might should promote some chips at a decrease revenue margin or at a loss, the 2 sources briefed on take a look at knowledge stated.
Panther Lake is “totally on observe,” Intel stated in its July 30 remark. Intel didn’t specify the yield threshold at which its chips turn into worthwhile.
The corporate has warned it may exit modern manufacturing completely if it doesn’t land exterior enterprise for 14A, which is 18A’s next-generation successor.
‘HAIL MARY’
Intel’s 18A course of concerned large manufacturing adjustments and launched newer applied sciences abruptly, reminiscent of a next-generation transistor design and a function that may enhance the supply of vitality to a chip. This created manufacturing dangers as a result of complexity of fabricating chips, three of the sources stated.
Intel took on this problem to shut the efficiency hole with TSMC, however its aggressive timeline for a rollout of unproven methods set it up for failure, stated the 2 folks briefed on the corporate’s take a look at knowledge. One likened the trouble to a “Hail Mary” soccer move.
In April, Intel stated it had begun an important step towards printing Panther Lake chips through 18A referred to as “danger manufacturing.” The corporate additionally confirmed off a number of laptops it stated used Panther Lake chips on the Taiwan Computex expo in Could.
However issues have persevered.
A technique chip producers gauge progress is to measure the variety of defects per space of a chip, which may fluctuate based mostly on a semiconductor’s design. Relative to business requirements, the Panther Lake chips had about thrice too many defects for Intel to start out high-volume manufacturing, the 2 sources briefed on take a look at knowledge stated.
As of late final 12 months, solely round 5% of the Panther Lake chips that Intel printed had been as much as its specs, these sources stated. This yield determine rose to round 10% by this summer season, stated one of many sources, who cautioned that Intel may declare the next quantity if it counted chips that didn’t hit each efficiency goal. Reuters couldn’t set up the exact yield at current.
Within the interview with Reuters, Zinsner disputed these figures and stated “yields are higher than that.” He didn’t give a quantity for July or late 2024, and Intel declined to offer this knowledge.
“Our expectation is each month they will get higher and higher, such that we’re at a yield stage that’s good for production-level Panther Lake on the finish of the 12 months,” he stated, including: “I would not say that margins are accretive even at these yield ranges, so we nonetheless should make enchancment.”
Tan has tapped supply-chain contacts greater than ordinary for Intel and has given them knowledge to assist enhance chip yields, Zinsner stated.
For now, Intel stays partly depending on TSMC to make its in-house designed chips. An Intel government stated in June that Nova Lake, a chip it’s planning after Panther Lake, will likely be made partly on TSMC, too.
(Reporting by Max A. Cherney and Jeffrey Dastin in San Francisco; Further reporting by Stephen Nellis; Enhancing by Sayantani Ghosh, Matthew Lewis and Anna Driver)
