NVIDIA Halts 18A Chip Plans, Weighs on Intel's Foundry Outlook

Intel has sold 2.148 billion shares to NVIDIA in a $5 billion deal, according to a U.S. SEC filing from December 29. The transaction was executed under a September 15, 2023, agreement between the two tech giants. The move is part of NVIDIA's broader strategy to support Intel amid the latter's ongoing manufacturing struggles.

The deal also includes plans for the companies to co-develop chips for PCs and data centers, signaling a potential shift in the semiconductor landscape. This collaboration could challenge TSMC, which currently produces NVIDIA's high-end processors. Analysts are watching closely to see if NVIDIA will eventually shift some of its chip production to Intel.

Meanwhile, Intel's stock dropped after news surfaced that NVIDIA is halting plans to use its 18A manufacturing process for chips. The 18A node has faced yield and performance challenges, and NVIDIA has opted to stick with TSMC for now. This has raised questions about the long-term viability of Intel as a foundry partner for NVIDIA.

Why the Standoff Happened

Intel's 18A process was intended to be a game-changer, offering competitive performance and manufacturing capabilities. However, internal testing by NVIDIA revealed "disappointing" results, particularly in performance-per-watt and wafer yields according to reports. Despite improvements in yield rates—from roughly 10% in early 2025 to 55–65% by the end of the year—NVIDIA determined the node was not yet ready for high-volume production according to data. The company has opted to keep its next-generation Blackwell chips on TSMC's N2 (2nm) node instead.

The decision reflects a broader industry trend of prioritizing proven technology over untested alternatives. While Intel has made progress with its Panther Lake and Clearwater Forest internal products, external foundry customers like NVIDIA, Broadcom, and AMD have been hesitant to commit to the 18A node. NVIDIA's move reinforces the idea that manufacturing reliability is a key factor in high-stakes semiconductor partnerships.

How Markets Reacted

Intel's stock reacted swiftly to the news, falling nearly 2.3% on December 24 according to reports. Analysts pointed to this as a potential headwind for Intel's stock, which had been buoyed by hopes of a closer relationship with NVIDIA since the $5 billion investment in September according to market analysis. The drop underscored investor skepticism about Intel's ability to compete with TSMC in the high-performance chip space.

NVIDIA, on the other hand, saw a more muted reaction, with its stock declining just 0.8% on the same day according to market data. The company remains the world's most valuable, with a market capitalization exceeding $4.5 trillion. Despite the modest decline, NVIDIA's shares have surged nearly 40% in 2025, reflecting its dominant position in the AI and semiconductor markets according to financial analysis.

What Analysts Are Watching

The focus for analysts is shifting toward Intel's upcoming 14A node, which is designed to leverage next-generation High-NA EUV lithography according to industry reports. If Intel can achieve strong yields and performance on the 14A node, it could become a viable alternative to TSMC for NVIDIA and other major customers. The 14A roadmap is also seen as a critical step in Intel's efforts to regain relevance in the foundry business according to market analysis.

Meanwhile, NVIDIA's partnership with Groq has sparked mixed reactions. The $20 billion non-exclusive licensing deal—along with the acquisition of key executives—has raised questions about the strategic value of Groq's technology according to analyst commentary. Some analysts argue that NVIDIA already has superior inference capabilities, while others believe the deal is a defensive move to secure talent and intellectual property according to market analysis.

Risks to the Outlook

Intel faces several key risks as it works to solidify its position in the semiconductor industry. The most immediate is the continued underperformance of its 18A node, which has already caused major customers to pause or cancel production plans according to reports. If Intel fails to improve yields and performance, it could lose credibility with both existing and potential clients according to industry analysis.

Another risk is the growing competition in the foundry market. TSMC remains the industry leader, with strong customer relationships and advanced manufacturing capabilities. Meanwhile, AMD and other competitors are also pushing into Intel's traditional territory according to market intelligence. Intel will need to demonstrate consistent performance and reliability to maintain relevance in this increasingly crowded space.

What This Means for Investors

For investors, the Intel-NVIDIA partnership offers both opportunities and uncertainties. On the one hand, NVIDIA's $5 billion investment is a strong endorsement of Intel's long-term potential, particularly in the context of geopolitical concerns about semiconductor supply chains according to industry analysis. This support could help Intel attract additional funding and customers in the future according to market reports.

On the other hand, the decision to delay 18A adoption by NVIDIA and other industry leaders highlights the challenges Intel faces in proving its technical capabilities. Investors may need to remain patient as the company works through these issues, with key milestones expected in 2026 and beyond according to analyst projections. The performance of Intel's 14A node and the success of the co-designed AI PC chips will be critical indicators of the company's progress.