Under CEO Pat Gelsinger, Intel (INTC -2.11%) laid out a plan back in 2021 to develop five new semiconductor process nodes within four years. The final node, Intel 18A, was meant to catch the company up with TSMC in terms of process technology.

The Intel 18A process remains on track to be ready by the end of the year, with high-volume production slated for 2025. Multiple future first-party products, including Panther Lake PC CPUs and Clearwater Forest server CPUs, will be built on the Intel 18A process and are scheduled to launch next year.

Intel 18A will include a few major innovations, notably a new transistor architecture and backside power delivery. Intel’s plan was to first introduce these technologies in the Intel 20A process, which the company was originally expected to use for this year’s PC CPU products. Given Intel’s financial struggles, it’s instead effectively killing off the Intel 20A process altogether.

Turning to TSMC

Intel disclosed a few months ago that it would use TSMC’s 3nm process to manufacturing Lunar Lake, its latest laptop CPUs that are now shipping, instead of Intel 20A. Based on Intel’s numbers, Lunar Lake systems should deliver best-in-class battery life and effectively compete with AMD and Qualcomm.

Arrow Lake, Intel’s upcoming family of desktop CPUs, was until recently expected to use the Intel 20A process for its compute tile. That plan is now out the window as well. The company disclosed last week that it would move Arrow Lake to “external partners” for manufacturing while shifting resources from Intel 20A to Intel 18A.

The Intel 20A process was a bit of an oddball. It was never going to be available to Intel’s foundry customers, and Arrow Lake was the only product scheduled to use it once the Lunar Lake outsourcing decision was made. Spending to ramp up production of Intel 20A for a single product family may have been feasible when Intel’s finances were in better shape, but certainly not now.

Intel expects to save around $500 million in capital spending by not scaling up Intel 20A production. The company has already announced layoffs and a dividend suspension to cut spending, and it may sell off some non-core businesses to raise cash. With Intel needing to cut capital spending without undermining its long-term foundry ambitions, putting Intel 20A on the chopping block makes sense.

Not a complete loss

While Intel 20A will never see the light of day, the process was critical as Intel refined the core technologies that will define the Intel 18A process. In its article disclosing that Arrow Lake would move away from Intel 20A, the company noted that it successfully integrated its new transistor design and backside power delivery. The first commercial use of those technologies will now be Intel 18A rather than Intel 20A.

Intel 18A is important for Intel own’s products, but it’s absolutely critical for the foundry business. Whether Intel stands a chance at becoming the world’s second largest foundry by 2030 hinges on customers signing up for Intel 18A. The company has already snagged Microsoft as a future Intel 18A customer, but that was the last meaningful customer win Intel announced.

By shifting resources to Intel 18A earlier than originally planned, the company can better position the all-important process for its 2025 launch and the production ramp that will follow. Intel needs to win customers, but it also needs to scale up production efficiently. What it’s learned developing the Intel 20A process will help the cause.

While the Intel 20A process is dead, Intel 18A will stand on its shoulders as it drives the company’s product and foundry businesses forward in 2025 and beyond.