THE CRUNCH
An explosion at Intel's Fab 28 near Kiryat Gat, Israel, in mid-October killed two people, seriously injured one and forced the entire facility to shut down for about two weeks. On the company's earnings call, chief financial officer Dave Zinsner said production should restart by the end of this week, but Intel expects the incident to cost roughly $600 million in lost revenue across two quarters, cutting about $300 million from Q4 2026 and a similar amount from Q1 2027. The disruption falls almost entirely on server processors made with Intel's 10nm-class process technologies, and the company also expects a roughly 2% hit to fourth-quarter non-GAAP gross margin.
Fab 28 is one of Intel's key sites for chips built on its 10nm-class and Intel 7 processes, the latter formerly known as 10nm Enhanced SuperFin. Zinsner said almost all of the $300 million quarterly impact relates to 10nm server products. Intel has not named the affected Xeon families, disclosed how many wafers were damaged, or said when the fab will return to full capacity after Friday's restart.
The scope is wider than the 10nm label might suggest: Intel's current Xeon 6 processors use compute dies made on Intel 3, but their I/O dies are fabricated on Intel 7, so the shutdown touches Intel's newest server chips as well as older generations. Intel still sells previous-generation Xeon 5 Emerald Rapids chips made on Intel 7, and it stopped taking orders for Xeon 4 Sapphire Rapids in late September. Intel also has other 10nm-capable fabs in Arizona, but it cannot simply shift production elsewhere: it says it has already done what it can, other fabs may lack the product-specific qualifications, and transfer costs and time make switching impractical with the Israeli fab about to restart.
Beyond lost output, Intel is assessing work-in-progress inventory to decide which wafers can be recovered and which must be written off. Zinsner expects most write-offs in Q4 2026, which is why the gross-margin impact concentrates in that quarter even though the shipment disruption runs into early 2027. Intel has not said whether client processors made on Intel 7, such as 12th to 14th-generation Core chips, will also be affected, as it is unclear whether Fab 28 makes any of them.