According to sources familiar with the matter, Intel's next-gen chip manufacturing node, Intel 18A (1.8nm), is facing serious yield issues despite being positioned as a key technology to win foundry customers and reestablish leadership in high-performance chip production.

Insiders revealed that by the end of 2024, only around 5% of Panther Lake chips made on the Intel 18A process meet quality standards. That number is expected to rise to 10% by mid-2025. However, those figures could appear higher if chips not fully meeting performance targets are also counted — a method Intel may use to paint a more optimistic picture.

Intel has been touting Intel 18A as the core of its manufacturing comeback, pouring billions into new fabs and upgrades. The goal: to close the tech gap with TSMC and position its foundry services as a competitive alternative. The stakes are high, not only for Intel's chip design ambitions but also for the broader push to revive advanced chipmaking in the U.S.

Early test results from 2024 have reportedly disappointed some clients. Still, Intel insists volume production of Panther Lake laptop chips—featuring next-gen transistors and improved power delivery—is on track for 2025. The company hopes that building such cutting-edge internal products will also boost external customer confidence in its foundry capabilities.

Yet, those familiar with internal testing data say only a small fraction of the Panther Lake output currently meets customer-grade quality. With such low yields, turning a profit on these chips—especially in the short term—will be difficult.

Historically, Intel has aimed for at least a 50% yield before entering mass production. True profitability typically requires 70–80% yield, particularly for compact, high-density chips like Panther Lake where defects can ruin entire dies.

Achieving a major yield ramp ahead of Panther Lake's expected Q4 launch is seen as a tough challenge. Without significant improvement, Intel may have to sell some chips at reduced margins or even at a loss.

Intel CFO David Zinsner acknowledged in July that yield rates are “l(fā)ow at the beginning, then improve over time,” and said Panther Lake is currently at the early stage of volume production. Intel remains confident, stating that yield progress supports a successful launch that will strengthen its notebook market position.

Still, Intel did not specify what yield level it needs to make Intel 18A profitable. It previously warned that if its future Intel 14A (1.4nm) node fails to attract external business, it may consider exiting leading-edge manufacturing altogether.