Intel has placed a significant bet on its next-generation 18A process, investing heavily to make it a forefront player in the semiconductor industry. Recent developments indicate promising advancements, but caution is advised when assessing the full impact just yet.
KeyBanc Capital Markets reports that Intel’s 18A process yields have improved to 55%, up from the previous quarter’s 50%. This improvement positions Intel closely behind TSMC’s 2nm yield of 65% and ahead of Samsung’s SF2 yield at 40%. Projections suggest that Intel’s yield could climb to 70% by the fourth quarter of 2025.
The upcoming 18A process is largely compatible with TSMC’s 2nm node, making Intel’s progress even more noteworthy. KeyBanc projects continued improvements, while Wells Fargo cautions that it’s premature to declare a full turnaround for Intel just yet. They anticipate Intel will share a positive update in its Q2 earnings call, emphasizing the importance of this progress for Intel’s foundry division, which aims to break even by 2027.
Wells Fargo also notes uncertainty surrounding the launch of Intel’s 18A-based Diamond Rapids Xeon CPUs. They expect the Panther Lake CPUs to debut by the end of 2025 but foresee the major market ramp happening in the first half of 2026.
At the recent Symposium on VLSI Technology and Circuits, Intel highlighted the advantages of its 18A process, which promises 30% more density scaling, 25% higher frequency, and 36% lower power consumption compared to the current Intel 3 process.
However, Wells Fargo anticipates AMD will continue gaining market share during the latter half of 2025 and into 2026 with its 2nm-based Zen 6 EPYC platform, presenting challenges for Intel on both client and server fronts. As a result, Intel’s financial outlook remains strained, with gross margins unlikely to sustain significant recovery amid competitive pressures. Wells Fargo has set a $22 price target on Intel’s shares, reflecting the current stock price.
Intel’s CEO, Lip-Bub Tan, faces a considerable challenge, as the company strives to catch up in critical areas. Tan aims to guide Intel toward becoming an engineering-centric company, with the 14A process potentially allowing the foundry division to compete with TSMC fully. Stabilizing the 18A process remains crucial for Intel to maintain competitiveness, particularly against heavyweights like NVIDIA and AMD.
