This letter examines void nucleation and coalescence in Au–Al wire bonds using high-resolution transmission electron microscopy. It is found that void formation is not only attributed to Kirkendall-type migration as conventionally believed, but also due to volumetric shrinkage and intermetallic oxidation. A volumetric shrinkage of a few percent is associated with intermetallic growth and phase transformations. Intermetallic oxidation occurs at the intermetallics/alumina interface and the migration of oxygen towards the intermetallics leads to void growth and thickening of the surrounding oxide walls.