Nvidia Corp. (NVDA) has pulled the plug on testing whether it would make its cutting-edge artificial intelligence chips using Intel Corp.'s (INTC) 18A production process, according to sources close to the situation. And if you're wondering whether that's good news for Intel's ambitions to become a major contract chipmaker—it's not.
The testing program was part of Intel's broader effort to establish itself as a credible alternative to Taiwan Semiconductor Manufacturing Company (TSM), the $1.5 trillion behemoth that currently dominates the contract chipmaking world. Intel's pitch has been straightforward: we can manufacture advanced chips for other companies too, not just our own designs. But when one of the most important chip designers in the world stops testing your technology, that pitch gets considerably harder to make.
Intel stock slipped following the news on Wednesday, falling 3.27% to $35.16 in premarket trading.
The $5 Billion Elephant in the Room
Here's what makes this particularly awkward: Nvidia announced a $5 billion investment in Intel earlier this year. That deal involved a broad partnership to jointly develop multiple generations of custom data center and PC products designed to accelerate AI and computing workloads across cloud, enterprise, and consumer markets. When that news broke, Intel shares rocketed more than 29% higher, adding to momentum from recent U.S. government support.
But even at the time, there were hints that manufacturing wasn't necessarily the centerpiece of the relationship. Intel CEO Lip-Bu Tan stressed that the companies were focused on collaboration rather than manufacturing agreements. Nvidia CEO Jensen Huang said basically the same thing. So maybe this testing pause was always a possibility, even if it's not exactly the vote of confidence Intel was hoping for.
Intel Says Everything's Fine, Actually
For its part, Intel insists its 18A manufacturing technology is progressing smoothly and continues to generate interest from potential customers. The company also touted its upcoming 14A process, which it claims will deliver chips that are both more powerful and more energy-efficient.
And to be fair, Intel's stock has had a solid run lately. Shares are up more than 81% year-to-date, boosted by the Trump administration's investments, the Nvidia partnership, and reports suggesting Apple Inc. (AAPL) might potentially use Intel for future M-series chips. That's a lot of good news to offset one testing program getting shelved.
Meanwhile, Nvidia continues its march toward world domination. The company became the first to cross the $4.5 trillion market cap threshold in October 2025, leapfrogging Apple (AAPL), Alphabet Inc. (GOOGL), and Microsoft Corp. (MSFT) in the process. When you're that dominant, you can afford to be selective about your manufacturing partners.
The big question for Intel is whether this is just one customer making one decision, or whether it signals broader challenges in convincing the industry's major players that Intel foundry services can compete with TSMC. Time will tell, but for now, Intel's path to becoming a major contract chipmaker just got a bit rockier.
