Intel Shares Face Pressure as Nvidia Withdraws from Key Manufacturing Deal

Intel's stock encountered significant headwinds this week following reports that Nvidia has halted its evaluation of a crucial Intel manufacturing technology. This development comes despite Nvidia's substantial $5 billion investment in Intel just last September, a move that now appears to have fallen short of cementing a binding production partnership between the two chip giants.

According to industry reports, Nvidia has discontinued its testing of Intel's advanced 18A manufacturing process and will not be proceeding with chip production using this technology for the foreseeable future. This decision was made even in light of the multi-billion dollar investment finalized in September 2025, which formed part of a broader stabilization initiative for Intel. That same deal also saw the U.S. government secure a 10 percent stake in the semiconductor company.

The terms of Nvidia's financial commitment reportedly did not include any obligation for actual chip fabrication. After a period of technical assessment, Nvidia ultimately opted against utilizing Intel's foundry services. The move represents a notable challenge for Intel, as its 18A process—a 1.8-nanometer technology—is considered central to its strategy for catching up with the industry leader, Taiwan Semiconductor Manufacturing Company (TSMC).

Government Comments Temper Investor Sentiment

The situation was further compounded by a statement from the U.S. Department of Commerce, which indicated that Intel is not considered "too strategic to fail." This remark has tempered the assumption held by many market participants that the federal government would provide unconditional support to Intel in a crisis. Since the $6 billion CHIPS Act agreement was reached, this perceived implicit government guarantee had been a supportive factor for Intel's equity valuation.

Should investors sell immediately? Or is it worth buying Intel?

In response, Intel has stated that its 18A technologies are progressing well. Furthermore, industry rumors suggest that a collaborative effort with Nvidia on a joint chip, codenamed "Serpent Lake," may still be ongoing. However, this news was insufficient to stem the selling pressure on Intel shares.

Core Business Restructuring Provides a Foundation

This news arrives during a pivotal transformation phase for Intel. Since assuming the CEO role in March 2025, Lip-Bu Tan has enacted a sweeping restructuring plan. The company has reduced its workforce by approximately 15 percent, implemented significant cost-cutting measures, and sharpened its focus on core business operations. On a positive note, Intel has already secured Microsoft and Amazon as major anchor customers for its 18A manufacturing node.

The broader semiconductor landscape remains tight. Reports indicate that TSMC's 2-nanometer production capacity for 2026 is already fully booked. Should industry-wide supply constraints intensify, Intel could potentially benefit in the medium term—provided its technology delivers on its performance promises.

The most critical validation for Intel's 18A process is on the horizon. The company's own upcoming "Panther Lake" processors are slated to be manufactured using this very technology. A successful launch would serve as definitive proof of the process's viability for high-volume production. Forthcoming quarterly financial results will reveal the status of Intel's customer pipeline and the actual revenue contribution from its foundry segment.