Intel (INTC, Financial) is facing significant challenges as TSMC has reportedly canceled a 40% discount on wafer production services, impacting Intel's profit margins. Initially, TSMC provided a discount on 3nm wafers produced for Intel, but tensions arose after Intel's CEO, Pat Gelsinger, promoted the "IDM 2.0" strategy and urged the U.S. government to reduce dependence on Taiwanese semiconductor manufacturing. This led to TSMC revoking the discount, requiring Intel to pay full price, which is approximately $23,000 per 3nm wafer.
Gelsinger's comments suggesting that "Taiwan is not a stable place" prompted a strong response from TSMC, which decided to quietly remove the discount. Despite the public downplay by TSMC, its founder Morris Chang described Gelsinger's remarks as somewhat impolite.
Compounding Intel's difficulties, the company is also experiencing issues with its Intel 18A process. Reports indicate that the process failed to pass Broadcom's testing, with less than 20% of chips meeting preliminary standards. This is notably lower than the yield rates seen in TSMC's trial production phases.
Intel has announced plans to launch the Intel 18A process next year, claiming the defect density (D0) has reached below 0.4 defects per square centimeter. However, planning documents from a supplier suggest potential delays, as a digital design kit is still awaited before proceeding. Sources suggest that large-scale production using Intel 18A may not happen until 2026.
