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The explosion at Intel’s Kiryat Gat chip fabrication facility in Israel earlier this month will cost the company about $600 million in lost revenue across two quarters, the company said during its Q3 2026 earnings call. Describing the incident as an “unfortunate and tragic accident,” Intel CEO Lip-Bu Tan told analysts that the incident led to a two-week shutdown of the factory, which will impact the chipmaker’s Q4 10-nanometer server shipments. Two workers were killed, and another was seriously injured following an explosion at Intel’s Kiryat Gat chip fab earlier this month. According to local media reports at the time, police suspect the explosion resulted from a gas cylinder malfunctioning whilst it was being unloaded from a truck, with Israel’s Fire and Rescue Services stating that following the blast, a nitrogen trifluoride (NF3) leak occurred. Nitrogen trifluoride is a toxic gas primarily used in semiconductor manufacturing for cleaning and etching silicon wafers. NF3 is non-flammable but can be highly dangerous if inhaled. On the earnings call, Intel’s CFO, David Zinsner, said that the company was hoping to restart production at the site “by the end of this week,” and had been assessing wafers to see what is usable and what would need to be scrapped. “This is somewhat of an early assessment, both really of Q4 [2026] and of Q1 [2027], but I think the current thinking is that we will have about a $300 million impact to the fourth quarter. That is likely to be similar in the first quarter,” he noted. Intel revenues up Intel reported third-quarter revenue of $16.5 billion, up 21 percent Year-over-Year (YoY), with data center and AI (DCAI) revenue up 17 percent Quarter-over-Quarter (QoQ) and 78 percent YoY to $7.3 billion, with growth seen across hyperscale, enterprise, and neocloud customers. “We also continued to see strong momentum in purpose-built silicon, with revenue increasing more than 50 percent sequentially and more than doubling YoY,” Zinsner said. However, despite Intel’s efforts to increase capacity, he said that demand for DCAI products continued to exceed available supply. “DCAI operating profit was $3 billion, representing 42 percent of revenue and increasing approximately $600 million sequentially,” he added. “The improvement was driven by higher revenue and lower operating expenses. Granite Rapids is now the largest product family in our server portfolio as we continue to increase output from our Ireland facility.“ Meanwhile, Intel Foundry revenue was up 16 percent QoQ to $6.7bn, which Zinsner attributed to “better-than-expected growth on Intel 3 and Intel 18A.” External foundry revenue totaled $411 million for the three-month period – a sequential increase of $118m – with the unit reporting an operating loss of $1.9 billion, down from $2.1bn in Q2 2026. “During the quarter, Intel 3 and Intel 18A yields both increased again, with Intel 18A improving at a double-digit rate,” Tan said on the earnings call. “Wafer output on both nodes exceeded expectations. Intel 18A-P remains on track for launch by year-end across our internal product portfolio, and external customer engagement continues to build.” He added that the chipmaker was engaged with “a couple of highly strategic customers,” and he remained "increasingly confident that our Intel 18A-P will be an attractive node for external foundry customers." With regard to Intel's 14A process node, which Tan has previously said the company would only move forward with if a "meaningful external customer to drive acceptable returns on our deployed capital” could be found, the CEO told analysts he was “highly encouraged by the progress we are making with multiple potential customers on 14A.” In April of this year, Tesla CEO Elon Musk said that the EV company was planning to use Intel’s 14A chip manufacturing process at its $20 billion ‘TeraFab’ project in Austin, Texas. While Tan did not name the customers on the call, he said Intel would be ready to announce “a couple” in the next two quarters. The quarter wasn’t entirely positive for Intel, however. Falling YoY revenue in the company’s client computing and physical AI group, combined with a weak fourth-quarter revenue forecast, saw Intel’s shares fall by around 20 percent in extended trading. “We're guiding Q4 revenue to a range of $15-$16 billion,” Zinsner told analysts. The CFO said that despite the anticipated financial impact of the explosion, Intel still expects 2027 to be a “growth year” and is expecting the momentum its DCAI segment experienced during Q3 to continue into the fourth quarter and beyond. “The only little nuance is the first half of the year; we are still a bit constrained. We talked about putting 40 percent more capacity in substrates, but a lot of that does not hit us until the back half of the year,” he said. In an effort to address these pressures, Zinsner said Tan had been in Japan talking to substrate vendors to make sure Intel continued to receive its “allocated and appropriate supply.” “I think we are as well positioned as anyone out there in terms of delivering supply. It is tight. It is going to be tight this next quarter and going into the first half [of 2027]. But I think we positioned ourselves well so that beyond that, we should start to see some pretty healthy growth in the data center business.” More in Investment / M&A / Financing - Episode 2027 Trends and Outlooks: Europe
document fetched 2026-10-31 02:54 · canonical https://datacenterdynamics.com/en/news/intel-says-israel-fab-explosion-will-cost-company-600m-in-losses-as-q3-26-revenue-hits-165bn