You are currently viewing SemiWiki as a guest which gives you limited access to the site. To view blog comments and experience other SemiWiki features you must be a registered member. Registration is fast, simple, and absolutely free so please, join our community today!
Zinsner said Intel 7 cost and 18A cost are the same a while ago... things didnt work out like he planned.. Lets see what he says next week. 18A wafer cost is not I7 wafer cost
Also the 18A volume is still low .... it is not any where near 40K wafer per month at Fab 52. and then we have the whole "Intel is only 51% owner of Fab 52"... I have no idea how they will report this "non controlling income"
the real question will be how much of the 18A financial issue will go to product group and how much will go to IFS. OR will intel change the accounting yet again???? looking forward to see what happens.
If you can ask questions of Intel at earnings:
" are 18A PRODUCT margins better or worse than Intel 7 in 2026"
"are panther lake product margins higher or lower than Arrow lake and Lunar Lake"
Well for the first part of question it will be obvious answer of Intel 7 product being a better margin overall at Intel level cause the IP and both the process have all the juice extracted from them
For 2nd part I would like to know as well.
The funny thing is, even if Intel knows that trying to do 'dibs and dabs' together is what made them stumble before, they still have to do the exact same thing to regain process leadership. Now they're integrating Nanosheets and BSPDN simultaneously, while trying to bring up 2.5D packaging along with them. They have to learn them fast because now High NA(and stitching) is wating for them...
My impression is that they’re actually technically pulling it off with all these at once (Panther Lake and Clearwater Forest is proof), but “at what cost” is the question? e.g. yield, wafer cost, packaging cost
the real question will be how much of the 18A financial issue will go to product group and how much will go to IFS. OR will intel change the accounting yet again???? looking forward to see what happens.
If my observation of Intel’s past behavior is accurate, I expect the company to attribute as many costs and expenses as possible to IFS. That approach makes the narrative easier to explain to analysts and the general public. Everyone already knows that IFS is losing money and facing significant challenges, so adding a few more items to IFS' list of problems doesn’t meaningfully change the overall picture.
If you can ask questions of Intel at earnings:
" are 18A PRODUCT margins better or worse than Intel 7 in 2026"
"are panther lake product margins higher or lower than Arrow lake and Lunar Lake"
In June 2024, Intel’s then CEO, Pat Gelsinger, said during an interview in Taiwan:
"Q: Intel's foundry business has suffered huge losses over the years. What’s the future for the company’s foundry business?
A: Today, our wafers are largely driven by Intel 10 and Intel 7. Those technologies are not that competitive in terms of processes nor costs. But as we get to the five nodes and four years to Intel 3 and Intel 18A, these are very competitive and much more cost-effective. So, as those technologies ramp up, we will go to break even and then be in a very comfortable profitable business later in this decade. We feel very comfortable with the profitability strategy plan that we've laid out."
Now that we are in 2026 and Intel has Intel 3 and 18A in volume production, I wonder if Pat Gelsinger’s prediction has come true.
Another unusual situation is that, despite the high cost of Intel 7, Intel may prefer it in some cases because it may generate more profit for Intel than Intel 3/4 or Intel 18A. The reason is that the Arizona fabs (responsible for 18A manufacturing) and the Ireland fabs (responsible for Intel 3 and Intel 4 manufacturing) are 49% owned by Brookfield (Arizona fabs) and Apollo (Ireland fabs). Intel has guaranteed certain investment returns (not publicly disclosed) to Brookfield and Apollo. As a result, Intel 7 may ultimately deliver higher profit to Intel because there is no outside party with whom profits must be shared.
If my observation of Intel’s past behavior is accurate, I expect the company to attribute as many costs and expenses as possible to IFS. That approach makes the narrative easier to explain to analysts and the general public. Everyone already knows that IFS is losing money and facing significant challenges, so adding a few more items to IFS' list of problems doesn’t meaningfully change the overall picture.
They may, indeed, make that choice. However, I would caution against setting expectations based on Intel's past behavior. Intel has had two CEO's that weren't steeped in the Intel culture.
The first was Bob Swan who, if rumors are to be believed, was looking to divest Intel of its fabs. Heresy to the old guard who bleed blue. He was also making significant changes to the culture that were designed to move Intel away from the twisted version of the Grovian culture that had grown up over time. Just my opinion, but I think Andy Grove was rolling over in his grave when he saw what the culture he had fostered had become. A culture where data was ignored and people were afraid to question decisions wasn't what Grove advocated for.
The second is Lip-Bu Tan. Like Swan, he is an outsider and less interested in doing things the Intel way. From all I hear, he is doing far more than giving lip service to the idea of listening to the customer. It will be a long journey (I've seen statements that he committed to 10 years in the CEO role), but sees a very different company at the end of the road than his predecessor. Gelsinger seemed to want to raise the old Intel from the ashes, but Lip-Bu Tan seems like he wants to fundamentally change the company. I believe his approach is far more pragmatic and the changes he is driving in Intel culture will result in a very different company from the Intel of the past.
My impression is that they’re actually technically pulling it off with all these at once (Panther Lake and Clearwater Forest is proof), but “at what cost” is the question? e.g. yield, wafer cost, packaging cost
Yes exactly. It's not like it's mission impossible or anything. If they manage to pull everything(or most of things) at once, and if it helps their products team to regain "product" leadership(compared to mixing TSMC silicons) before they burn all cash available.
I think Intel is sending mixed signals now. Panther lake showed superior PPA in their presentations, very first debut of BSPDN but where are 18A HX products and desktop variants? Maybe they simply lacked capital to ramping up due to COVID? or Do they bleed capital if they use more Intel silicons than TSMC's?
One interesting opponents here is Samsung. Samsung Foundry acquired non-conventional(?) leading edge customers. Samsung Memory(HBM base die, high volume and easy to pattern) and Tesla(Non-mobile leading edge launch customer). It'll be really interesting to see how this market unfolds for 2~3 years.
Also the 18A volume is still low .... it is not any where near 40K wafer per month at Fab 52. and then we have the whole "Intel is only 51% owner of Fab 52"... I have no idea how they will report this "non controlling income"
Exactly as you say I suppose. It will be under "Income attributable to non-controlling interest" and will be deducted before the "Net income attributable Intel investor" is calculated. Net income, Earnings per Share and Operating & Free Cash Flow metrics will be lower. Also I would not assume that since Brookfield owns 49% of the Fab & tools, they would be entitled to 49% of the profit. It will be much lower in my opinion as Intel operates the fab & owns the IP being produced in the fab. It is like leasing a co-owned property. I don't know if that is 20% or 30% but definitely cannot be 49% (if it is then the CFO is a fool).
the real question will be how much of the 18A financial issue will go to product group and how much will go to IFS. OR will intel change the accounting yet again???? looking forward to see what happens.
We need to keep in mind Intel Product is already paying high wafer prices to TSMC (including 50% TSMC gross margin). So high wafer price for a leading-edge node is already accounted for in recent times for Intel Products team. It is a matter of ramping down Arrow lake+ Lunar Lake volume and increasing Panther Lake volume to offset. Considering 18A based products are much better than Arrow Lake & lunar lake (yes, all things indicate PTL is a better product than the ARL & LNL so far), ASP increase for 18A based products can be incremental. So, I think as 2026 progresses, Intel Product margins should stay flat. The threshold is Intel 18A wafers starting to eat into Intel 7 wafers volume (as opposed to N3), then product margin will start taking some hit. is the 18A based product ASP increase enough to offset 18A wafer ASP increase is a question, I don't have answer for yet. I have not accounted to demand destruction due to high memory prices.
On the foundry side, the 18A ramp cost would eat into margins but 18A wafer price would help margins. If yield is decent, the more they use foundry, the more the economics of foundry look good. If the cost of 18A wafer is higher than 18A wafer price due to low yield, then nothing changes and foundry bleeds money. But even these changes over time as yield improves. I only see margin improvement for Intel Foundry from here after some startup costs during initial ramp. The bigger problem is idle older node fabs that not producing anything or being underutilized.
