Intel to build most Nova Lake chips in-house as yields hit 85%

Intel ↗ 2.61% is dramatically reshaping its manufacturing strategy for its upcoming Nova Lake processors, planning to produce 80-90% of compute tiles internally on its 18A process node — a reversal from earlier plans that had assigned a larger role to TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 1.22%.techpowerup+2

Yield Breakthrough Fuels the Shift

The decision follows a rapid improvement in Intel's 18A manufacturing yields, which have reportedly climbed to approximately 85%, up from around 65% in the prior quarter. The gains mark a turnaround from mid-2025, when Reuters reported that only about 10% of Intel's 18A-produced Panther Lake chips were meeting specifications.tipranks+2

Intel confirmed earlier this month that it had resolved yield issues on 18A and reached production of 30,000 wafers per month, with yields improving at a rate of about 7% per month. The node combines two innovations — RibbonFET gate-all-around transistors and PowerVia backside power delivery — that no other chipmaker has deployed simultaneously in production.youtube+2

Analyst Raises Target, TSMC Responds

KeyBanc analyst John Vinh raised his Intel price target to $155 from $110 on Tuesday, maintaining a Buy rating. Vinh said "yields are changing the story" and that Intel's foundry turnaround is gaining speed through stronger chip yields and new customer wins in advanced packaging.tipranks

The manufacturing shift represents what one report called "a complete inversion of the original" plan for Nova Lake tile production. Intel had previously placed orders with TSMC for Nova Lake compute tiles on the foundry's N2 node. According to TrendForce, TSMC has responded to the reduced order volume by offering Intel less favorable wafer pricing and reduced optimization support.trendforce+2

Competitive Implications

The move carries strategic weight beyond cost savings. Intel's 18A has achieved a TechInsights performance score of 2.53, compared with 2.27 for TSMC's N2, though TSMC retains a density advantage. Nova Lake processors, expected to launch in late 2026, will feature up to 52 cores across dual compute tiles in a new LGA 1954 socket.wccftech+2

Despite Vinh's bullishness, Wall Street's consensus rating on Intel remains a Hold, with an average price target well below his.tipranks