Intel Stock Drops as Nvidia Pauses Testing of Advanced 18A Chip Technology

Semiconductor stock prices are known to react quickly, and this time it was quite early when the investors of Intel received the shock. A very brief report by Reuters was sufficient enough to cause a fall in share prices, which reminded the stock exchange that in the chip business even the smallest break in testing may be taken as a major plot twist, more so if Nvidia is being involved.

Intel stocks lost 2.7% of their value in premarket trading hours after Reuters reported that Nvidia has stopped the trial of Intel’s advanced 18A chip manufacturing.

As per the report, Nvidia had been testing the possibility of producing chips with Intel’s 18A technology, but they eventually decided not to go ahead with the testing, which in turn made the investors get very concerned. Therefore, they reacted quite immediately upon it.

Intel Stands Firm

Reuters was informed by an Intel representative that the 18A production technologies of the company are “progressing well”, but no more information was given about Nvidia’s decision.

With such a minor emphasis from Intel on this matter, it did not soothe the market worries at all. However, Intel has made 18A a key element of its overall comeback plan and its aspirations in the contract chipmaking sector.  

Downfall Since a High-Profile Alliance

The report is especially hard to believe, since it was not so long ago that Intel and Nvidia had made a major cooperation announcement. As per the agreement signed in September, Intel was to make custom x86 CPUs for Nvidia’s AI infrastructure platforms, and also produce x86 system-on-chips that incorporate Nvidia RTX GPU chiplets for personal computing devices.

The collaboration was said to be a significant move towards the two former adversaries that turned partners, who are said to be having a close relationship.

The Financial Stakes Are Quite High

Under the agreement, Nvidia made a commitment to invest $5 billion in Intel’s stock, where they will buy the shares at a price of $23.28 each, which is subject to the regulatory clearances.

This financial support was interpreted as a sign of trust in Intel’s manufacturing roadmap, which made the rumored testing shutdown very inconvenient for investors who are already concerned about Intel’s execution.

Doubts About Intel’s Foundry Dreams

The reported break raises new inquiries regarding the technical readiness of Intel’s 18A process, which the company has been promoting as a key to its struggle against Taiwan Semiconductor Manufacturing Company in the field of advanced manufacturing.

However, a test that has been stopped does not always imply a rejection, but still the markets are very sensitive to any indication that Intel’s strategy to become a leading foundry might go through delays or that the top-tier customers may not be really confident.

Bottom Line

For Intel, perception is nearly as important as progress. The company argues that its 18A technology is going as per schedule, but Nvidia’s reported stoppage of the testing points towards how fragile the confidence around Intel’s manufacturing revival still exists.

Until clear signals come from the customers, or from Intel’s own production milestones, the investors might keep reacting strongly even to slight changes in the semiconductor sector.