Deadly Explosion Halts Intel's Fab 28 for Two Weeks, Costing $600 Million and Disrupting Server Chip Supply
A fatal explosion at Intel's Fab 28 in Israel forced a two-week shutdown, resulting in an estimated $600 million revenue loss and severely disrupting 10nm-class Xeon server chip shipments through Q1 2027.
A deadly explosion at Intel's Fab 28 near Kiryat Gat, Israel, occurred earlier this month, killing two workers and seriously injuring another. The incident forced a complete two-week shutdown of the facility. Intel CFO David Zinsner stated during an earnings call that production is expected to restart by the end of this week, but the disruption will cost the company approximately $600 million in lost revenue across the fourth quarter of 2026 and the first quarter of 2027.
Fab 28 is a key manufacturing site for chips produced using Intel's 10nm-class process technologies, including Intel 7 (formerly 10nm Enhanced SuperFin). While Intel's latest Xeon 6 processors use compute dies fabricated on Intel 3, their I/O dies are still manufactured on Intel 7. Additionally, previous-generation Xeon 5 Emerald Rapids and Xeon 4 Sapphire Rapids CPUs continue to be sold and are made on Intel 7 technology. Zinsner noted that the disruption primarily affects 10nm-class server products and is expected to reduce Q4 non-GAAP gross margins by approximately 2%.
Although Intel has other fabs capable of 10nm production, such as Fab 12, Fab 22, Fab 32, and Fab 42 in Arizona, the company cannot fully offset the output loss from Fab 28 due to strong existing demand for server processors. Transferring production between facilities involves high costs and time, and some product lines may lack specific manufacturing qualifications at other sites. Beyond lost production time, Intel faces potential write-offs for wafers undergoing fabrication during the accident, with most impacts concentrated in Q4 2026.