Intel expects the mid-October explosion at its Fab 28 plant near Kiryat Gat, Israel, to cost about $600 million in lost revenue across the fourth quarter of 2026 and the first quarter of 2027, and to reduce shipments of 10nm-class server processors for months, the company said during an earnings call.
The disclosure came from Intel chief financial officer Dave Zinsner, who said the company had been “shut down for about two weeks” in Israel and expected to be “starting up production here by the end of this week.” The blast killed two people and seriously injured one, and forced an extended shutdown of Fab 28, one of Intel’s key facilities for chips built on its 10nm-class and Intel 7 process technologies.
Intel expects the incident to reduce its fourth-quarter revenue by approximately $300 million, with a similar impact in the first quarter of 2027, and to cut its fourth-quarter non-GAAP gross margin by about 2%. Zinsner said almost all of the $300 million impact is related to 10nm server products.
Its latest Xeon 6 processors use compute dies built on Intel 3 technology, but their I/O dies are made on Intel 7, formerly known as 10nm Enhanced SuperFin. Intel also continues to sell previous-generation Xeon 5 Emerald Rapids and Xeon 4 Sapphire Rapids processors made on Intel 7, though it stopped accepting orders for Xeon 4 in late September.
Intel has not identified the affected Xeon families, disclosed the number of wafers damaged, or said when Fab 28 will return to full production capacity. The company has other 10nm-capable fabs, including several in Arizona, but it cannot fully offset the lost output as it struggles to satisfy strong demand for server processors. Other fabs may lack product-specific manufacturing qualifications, or the time and costs required to transfer production between facilities may be too high, given Fab 28 is about to restart. Intel will not repurpose the product lines it uses to make Xeon 6 I/O dies for older CPUs.
The company is now assessing work-in-progress inventory to determine which wafers can be recovered and which must be written off. Zinsner expects most wafer write-offs to occur in the fourth quarter, which is why the gross-margin impact is concentrated there even though shipment disruptions extend into early 2027.
Intel has not disclosed whether the shutdown will also disrupt shipments of client processors made on Intel 7, a node used for its 12th, 13th and 14th Generation Core processors, including Raptor Lake. The company has not said whether Fab 28 makes any of those chips or whether other facilities can compensate, leaving the availability of some consumer processors uncertain.
Analysis
Why This Matters
- The blast removes server chip output at a time Intel says it is already struggling to meet strong demand, which could tighten supply of Xeon processors for data centers.
- The financial hit is significant: about $600 million in lost revenue across two quarters and a roughly 2% reduction in fourth-quarter non-GAAP gross margin.
- Shipment disruptions are expected to stretch into early 2027 even as production resumes this week, and the company has not ruled out effects on consumer processors.
Background
Intel is one of the world’s largest semiconductor manufacturers and operates fabrication plants in several countries, including Israel and the United States. Fab 28, near Kiryat Gat, is one of its facilities producing chips on 10nm-class and Intel 7 process technologies, which underpin much of its server processor lineup. The mid-October explosion killed two people and seriously injured one, prompting the two-week shutdown at the center of the financial impact.
What to Watch
- Whether Fab 28 restarts production by the end of this week as Zinsner forecast, and how quickly it returns to full capacity.
- Intel’s assessment of work-in-progress wafers, with most write-offs expected in the fourth quarter of 2026.
- Whether Intel discloses any impact on Intel 7 consumer processors, which it has so far not addressed publicly.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedIntel expects the Fab 28 explosion to cause about $600 million in lost revenue across the fourth quarter of 2026 and the first quarter of 2027.Latest from Tom's Hardware: “the company expects that it will cost it approximately $600 million in lost revenue over two quarters.”
- SupportedIntel expects the incident to reduce shipments of 10nm-class server processors in both the fourth quarter of 2026 and the first quarter of 2027.Latest from Tom's Hardware: “The disruption is expected to affect server processors manufactured using Intel's 10nm-class process technologies and will reduce the company's shipments in both the fourth quarter of 2026 and the first quarter of 2027.”
- SupportedThe explosion shut Fab 28 for about two weeks, killed two people and seriously injured one.Latest from Tom's Hardware: “The explosion occurred in mid-October, killed two, seriously injured one, and caused an extended shutdown of Fab 28”
- SupportedZinsner said Intel expected to start up production by the end of that week.Latest from Tom's Hardware: ““We feel like we are going to be starting up production here by the end of this week.””
- SupportedZinsner said Intel had been shut down in Israel for about two weeks.Latest from Tom's Hardware: ““In Israel, we have been shut down for about two weeks,” said Dave Zinsner, chief financial officer of Intel, during the company's earnings call.”
- SupportedZinsner made these remarks during Intel's earnings call.Latest from Tom's Hardware: “said Dave Zinsner, chief financial officer of Intel, during the company's earnings call.”
- SupportedIntel expects about $300 million less revenue in the fourth quarter and a similar impact in the first quarter of 2027.Latest from Tom's Hardware: “Intel expects the incident to reduce its Q4 2026 revenue by approximately $300 million, and a similar impact is anticipated in Q1 2027.”
- SupportedIntel expects the incident to reduce fourth-quarter non-GAAP gross margin by about 2%.Latest from Tom's Hardware: “The company also expects the accident to reduce its fourth-quarter non-GAAP gross margin by approximately 2%.”
- SupportedZinsner said almost all of the $300 million impact relates to 10nm server products.Latest from Tom's Hardware: ““Please note almost all of the $300 impact from Fab 28 is related to 10nm server products,” Zinsner said.”
- SupportedIntel has not identified the affected Xeon families, the number of damaged wafers or when Fab 28 will return to full production capacity.Latest from Tom's Hardware: “Intel has not identified the affected Xeon processor families, disclosed the number of wafers damaged, or specified when Fab 28 will return to full production capacity”
- SupportedIntel is assessing work-in-progress inventory to determine which wafers can be recovered and which must be written off; Zinsner expects most write-offs in the fourth quarter.Latest from Tom's Hardware: “The company is assessing work-in-progress inventory to determine which wafers can be recovered and which must be discarded and written off. Zinsner expects most wafer write-offs to occur in Q4 2026”
- SupportedIntel has not disclosed whether the shutdown will disrupt shipments of client processors made on Intel 7, and the availability of some consumer processors could be affected.Latest from Tom's Hardware: “the company has not disclosed whether the incident will also disrupt shipments of client processors manufactured using its Intel 7 (10nm ESF) process technology. ... the shutdown could potentially affect the availability of some consumer processors as well.”
