Intel Shares Fall on Report Nvidia Halts Production Test

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(Bloomberg) — Intel Corp. shares fell in premarket trading Wednesday after a report said that Nvidia Corp. halted a test to use Intel’s production process to make advanced chips. 

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Nvidia recently tested the so-called 18A process but stopped moving forward, Reuters reported, citing two unidentified people familiar with the matter. 

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Spokespeople for Nvidia and Intel didn’t immediately respond to requests for comment. An Intel spokesperson told Reuters that the company’s 18A manufacturing technologies are “progressing well.”

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Intel’s shares fell about 2.3% in early trading before markets opened in New York. 

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Intel recently opened a new factory at its Ocotillo site in Arizona known as Fab 52 that’s the first to go into mass production with the 18A technique. The company says it’s the most cutting edge production technology developed and deployed in the US. Intel’s push to make advanced chips domestically is an attempt to challenge the global leader, Taiwan Semiconductor Manufacturing Co., and reassert American leadership in the industry. 

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Nvidia agreed to invest $5 billion into Intel in September, following the US government’s decision to take a roughly 10% stake in the company. The investment by the world’s most valuable company and a key designer of chips for the artificial intelligence boom was seen as a boost for Intel, which has struggled to stem losses and catch competitors that have surpassed it in recent years. However, the deal didn’t include a commitment for Intel to make Nvidia chips.

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18A is a bid to return to making Intel’s best offerings in-house. The technology contains two new features that Intel says are breakthroughs for the industry.

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The first relates to transistors, the microscopic switches that give semiconductors their function. Modern chips cram tens of billions of transistors into a small area. In order to make chips more efficient and use less energy, the ability to switch these transistors on and off becomes critical.

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The 18A products will be the first to have transistors made with so-called gate-all-around technology, a technique that allows finer control over this process, Intel said. That will allow for chips with more transistors — and the ability to handle growing amounts of data — that consume less power.

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The second innovation pertains to how the chips are powered. The ultimate promise is that chips can have more transistors and be more efficient. 

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(Updates with more detail on 18A process.)

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