- Nvidia halts trial of Intel’s flagship 18A process, sending shares down nearly 3% in premarket trading.
- Commerce Department official insists Intel has “a shot at success” but is not “too strategic to fail.”
- Setback raises fresh doubts about the effectiveness of Washington’s multi-billion dollar industrial policy.
Intel faced a renewed crisis of confidence on Tuesday after reports emerged that Nvidia has paused testing on the chipmaker’s most advanced manufacturing process. The halt has cast fresh doubt on the viability of Washington’s multi-billion dollar bet on the Silicon Valley icon’s revival.
By early premarket trading in New York, Intel stock had slid nearly 3%, touching its lowest levels since late November. The sell-off followed a Reuters report indicating that Nvidia has stopped work on Intel’s 18A node for potential future chip production.
Investors were hanging a lot of hope on 18A. If Nvidia is walking away even at the test stage, the market reads that as: ‘Something’s not working here.’
The commentary came from a portfolio manager at a large U.S. asset management firm, who spoke on condition of anonymity.
A Flagship Process Loses Its Star Tester
The development marks a sharp reversal from March 2025, when Nvidia and Broadcom began trial runs on the 18A node. Intel CEO Pat Gelsinger has long touted this specific technology as the company’s ticket back to the top tier of global chip manufacturing, positioning it as the primary rival to Taiwan’s TSMC.
At the time, the mere prospect of those trials sent Intel shares rallying more than 6%, fueling optimism that significant manufacturing contracts were on the horizon to validate the economics of Intel’s foundry ambitions.
Those trials have now effectively ended. Sources familiar with the situation indicated that while Nvidia had been evaluating the process, the company has decided against moving forward for the time being. No commitment to manufacture has been made.
Nvidia declined to comment on the matter.
Intel maintained a defensive posture, insisting the underlying technology remains sound. A spokesperson stated that the 18A manufacturing technology is “progressing well” and continues to see “strong interest” alongside the next-generation 14A node.
“Progressing well,” the spokesperson reiterated, without directly addressing Nvidia’s exit.
Billions in Equity, No Manufacturing Promise
The retreat comes just months after Nvidia agreed to invest $5 billion in Intel stock in September—a move framed by the White House as a crucial pillar of American industrial policy. However, that investment notably lacked a manufacturing commitment.
Nvidia made no commitment to manufacture with Intel in September when investing $5 billion. Right now we are focused on collaborations.
Intel Chief Executive Lip-Bu Tan made that distinction clear to reporters alongside Nvidia’s Jensen Huang when the tie-up was originally unveiled. That technicality now looks critical.
One way to read this is that the equity check was always about strategic alignment and political signalling, not foundry dependence. Nvidia got a seat at the table in Washington. It didn’t sign away its manufacturing freedom.
According to a veteran semiconductor analyst at a Wall Street bank, the deal was more political than operational. Meanwhile, Intel continues to struggle with technical hurdles. Delays in qualifying essential intellectual property blocks have pushed broader availability for many customers out to at least mid-2026, according to supplier documents.
Washington’s Limits: Not ‘Too Strategic to Fail’
The timing creates a headache for the Biden administration. The U.S. government has become one of Intel’s biggest backers, utilizing a multi-billion dollar equity stake to showcase its efforts to reshore advanced chipmaking.
Foreign chipmakers with U.S. operations have privately expressed concern that officials could quietly pressure customers toward Intel. However, responding to the latest news, a senior Commerce Department official pushed back on the notion of an indefinite government safety net.
The U.S. stake gives Intel a shot at success but not a leg up. The company is not too strategic to fail.
This language marks a stark shift for a sector long treated as system-critical.
It’s very unusual to hear a government say out loud that its national champion is not ‘too strategic to fail.’ It’s a warning to Intel management, but also a message to investors: politics won’t automatically save you.
A former U.S. trade official now advising tech companies noted the severity of the administration’s stance.
Foundry Ambitions Under Scrutiny
The optics for Intel are increasingly difficult. The company has pitched 18A as the cornerstone of its foundry strategy, promising to leapfrog rivals and win outside contracts from industry leaders like Nvidia, Broadcom, and AMD.
Yet, Intel’s own CFO had previously tempered expectations, noting earlier this year that external demand for 18A remains “extremely low,” with volume insufficient to drive rapid scaling. He told reporters in May that order volumes were “insignificant” and that the node would primarily be used for internal Intel products for the foreseeable future.
Nvidia’s exit reinforces that bearish view.
If your flagship AI customer decides, ‘We’ll sit this one out,’ it becomes harder to persuade everyone else that this is the node to bet on. It doesn’t mean 18A is dead, but the bar just went up.
Meanwhile, competitors such as TSMC continue to dominate cutting-edge production, benefiting from Nvidia’s heavy reliance on their advanced nodes for high-margin AI processors. Any delay in Intel’s foundry progress effectively deepens that moat.
Market Nerves
While the market reaction Tuesday was negative, it stopped short of panic. Traders are currently weighing whether this is a one-off decision by a notoriously demanding client, or an early signal that Intel’s grand foundry experiment is losing momentum before it truly begins.
Nobody outside those two companies knows if this was about yields, timelines, economics or just strategy. Until we do, every piece of Intel’s AI and foundry story will be treated with more skepticism.
As Intel approaches its next earnings call and Washington doubles down on industrial policy, investors are left pondering the question Nvidia implicitly posed: If a $5 billion partner and the U.S. government can’t make 18A work, who will?
