Manufacturing outsourcing move. Intel chips are already being manufactured by TSMC, amid inhouse issues for US firm
Intel chips are reportedly already being manufactured by the world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
This is according to consultancy Trendforce, which said that its investigations had revealed that “Intel has outsourced the production of about 15-20 percent of its non-CPU chips, with most of the wafer starts for these products assigned to TSMC and UMC.”
The move comes amid some challenges facing the American chip giant, with intense competition from AMD and others. Activist hedge fund Third Point LLC recently urged Intel to explore its strategic alternatives going forward, and this week CEO Bob Swan is to step down, to be replaced by VMware CEO Pat Gelsinger next month.
One of the questions Intel has been facing from investors is whether the firm should keep chip design and production under one roof.
And it is understood that TSMC has a dramatic technological lead over Intel when it comes to chip fabrication, demonstrated in the 5nm A14 chips the company makes for Apple.
“While the company is planning to kick off mass production of Core i3 CPUs at TSMC’s 5nm node in 2H21, Intel’s mid-range and high-end CPUs are projected to enter mass production using TSMC’s 3nm node in 2H22,” noted TrendForce.
It pointed out that in recent years, Intel has experienced some well documented setbacks in the development of 10nm and 7nm processes, which in turn greatly hindered its competitiveness in the market.
“With regards to smartphone processors, most of which are based on the ARM architecture, Apple and HiSilicon have been able to announce the most advanced mobile AP-SoC ahead of their competitors, thanks to TSMC’s technical breakthroughs in process technology,” said TrendForce.
It pointed out that AMD has outsourced its CPU production to TSMC, and that firm is progressively threatening Intel’s PC CPU market share.
Indeed, Intel has not been the automatic first choice amongst consumers for CPUs for high-end gaming PCs for a number of years now.
Furthermore, Intel lost CPU orders for the MacBook and Mac Mini, since both of these products are now equipped with Apple Silicon M1 processors, which were announced by Apple last year and manufactured by TSMC.
“The aforementioned shifts in the smartphone and PC CPU markets led Intel to announce its intention to outsource CPU manufacturing in 2H20,” noted TrendForce.
“TrendForce believes that increased outsourcing of its product lines will allow Intel to not only continue its existence as a major IDM, but also maintain in-house production lines for chips with high margins, while more effectively spending CAPEX on advanced R&D,” it said.
“In addition, TSMC offers a diverse range of solutions that Intel can use during product development (e.g., chiplets, CoWoS, InFO, and SoIC). All in all, Intel will be more flexible in its planning and have access to various value-added opportunities by employing TSMC’s production lines. At the same time, Intel now has a chance to be on the same level as AMD with respect to manufacturing CPUs with advanced process technologies.”
In November TSMC revealed it was to provide $3.5 billion to set up a wholly-owned subsidiary factory in Arizona.