Intel Eyes TSMC’s Chipmaking Crown As It Shares Big News For Advanced Technologies

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Even as its earnings guidance failed to meet analyst estimates, Intel’s latest earnings call provided upgrades about its ongoing expansion towards a contract manufacturing foundry model. Ahead of yesterday’s release, the chip giant announced that it had entered into a partnership with Taiwan’s United Microelectronics Corporation (UMC) to develop a new process node that will manufacture chips in the U.S. This will be part of Intel’s Intel Foundry Services (IFS) business division, i.e., the firm’s contract manufacturing business which aims to compete with the world’s largest contract chip manufacturer, the Taiwan Semiconductor Manufacturing Company (TSMC).

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Intel’s manufacturing woes that have led to its infamous product delays are well known in the chip industry, and another implication of the slowdown has been the growth in chips shipped by Taiwan’s TSMC. TSMC makes the latest processors for Intel’s smaller rival AMD, Apple, NVIDIA, Qualcomm and other players, allowing it to command a sizable chunk of the global semiconductor market.

Intel’s response to this is the IFS division, through which the firm will use its manufacturing technologies for customer orders. Its partnership with UMC is a part of IFS, and at its latest earnings call, Intel’s chief executive officer Patrick Gelsinger shared more details about customer interest in IFS products as well as the rationale behind teaming up with Taiwan’s biggest contract chip manufacturer after TSMC.

Customer interest in upcoming chip technologies is a keenly watched indicator when analyzing chip firms. It enables analysts to see whether the costs that a firm will book to develop new manufacturing technologies will be recovered by potential orders. A key feature of all TSMC analyst calls is management opinion about customer interest in upcoming technologies, and this was also the case during Intel’s earnings call for the fourth quarter of 2023.

According to Gelsinger, Intel is valuing IFS at $10 billion as of 2023 end, which is significantly higher than the previous estimate of $4 billion.

Intel’s revenue by business division during Q4 2023. Image: Intel Corporation

According to Gelsinger, the deal with UMC will expand Intel’s portfolios and allow it to leverage Taiwan’s well developed semiconductor industry and ecosystem. Crucially, he added that Intel is seeing strong customer interest in IFS, particularly for leading edge chip manufacturing technologies.

Intel’s current process roadmap placed the Intel 7 process in high volume manufacturing in September 2023, and the firm expects to have progressed by at least two additional chip generations by the end of this year. The Intel 3 process, which follows the Intel 4 (Intel 7’s successor), was manufacturing ready in Q4, shared the executive, as he explained that customer interest is high in one of Intel’s latest and leading edge technologies, the 18A chip node.

18A has been aggressively marketed by the firm, which has claimed that it offers performance that is on par with TSMC’s N2 technology. This is an important claim since N2 is expected to enter mass production in 2025, while Intel expects to be ‘manufacturing ready’ by the second half of this year.

The Intel executive also shared that as of now, IFS has 50 test chips in the works out of which 75% are for the Intel 18A process. Intel has four customers for its 18A process as of December 2023, shared its CEO, as it added a “significant high-performance computing customer” during the fourth quarter.

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