Intel's Foundry Gambit: Will It Lure Back Big Tech? | Barron's
Intel's Foundry Gambit: Will It Lure Back Big Tech?
Chipmaker Intel is betting big on its new foundry services, aiming to regain market share from TSMC and Samsung. The move could reshape the semiconductor industry, but success hinges on attracting key customers.
Background: Intel’s Shift from Chipmaking to Manufacturing
Intel, once the dominant force in semiconductor manufacturing, has seen its market share erode in recent years. The company’s delay in transitioning to advanced manufacturing processes, such as its 7nm technology, has allowed competitors like TSMC and Samsung to take the lead. In March 2021, Intel announced a strategic pivot, committing to become a “full-service foundry” to serve other chip designers.
Key Developments: Intel’s Foundry Services Take Shape
Intel’s foundry services are now operational, with initial clients including Qualcomm, Micron, and Amazon Web Services. The company has invested over $20 billion in new manufacturing facilities in Arizona, Ohio, and Germany, aiming to produce chips for customers by 2025. Intel’s 7nm process, now branded as Intel 4, is in production, with plans to introduce a more advanced Intel 3 process in 2023 and Intel 20A in 2024.
Intel's foundry division has also secured government support, including $8.5 billion in subsidies from the U.S. CHIPS Act and $15.6 billion in German subsidies. These investments are part of a broader effort to strengthen domestic semiconductor manufacturing.
Impact: A Potential Game-Changer for the Chip Industry
The success of Intel’s foundry services could significantly impact the semiconductor industry. TSMC and Samsung, which currently dominate the foundry market, may face increased competition. For tech giants like Apple, Nvidia, and AMD, Intel’s foundry services could provide an alternative to their current suppliers, potentially reducing supply chain risks.
Intel's foundry services could also bolster U.S. semiconductor manufacturing capabilities, reducing dependency on overseas suppliers. This aligns with broader geopolitical and economic trends, as governments worldwide seek to secure their own chip supply chains.
More Read
What Next: Intel’s Roadmap and Challenges
Intel’s foundry services are still in their early stages, and the company faces significant challenges. Ramping up production capacity, securing additional customers, and maintaining technological leadership will be critical. The company’s ability to compete with TSMC and Samsung on cost, performance, and time-to-market will determine its success.
Looking ahead, Intel plans to introduce its next-generation Intel 20A process in 2024, followed by Intel 18A in 2025. These advancements will be crucial in attracting more customers and solidifying its position in the foundry market. The company's progress will be closely watched by investors, industry analysts, and policymakers alike.
