Insight Bite: Intel’s foundry foray comes at a perfect time

“Intel is back”, said CEO Pat Gelsinger last month, before setting out plans to capitalize on tensions with China and the global semiconductor shortage by starting a new foundry business.

While Intel’s existing foundry business has been around for years, the firm is now making a fresh foray with a larger separate business unit called Intel Foundry Services, that will be almost entirely autonomous. This will be based at its Arizona facility, where the firm will spend $20bn to build two fabs to later be joined by similar plants elsewhere in the United States and Europe.

With global demand for chip manufacturing exceeding supply, and an estimated 80 percent of advanced foundry capacity located in Taiwan and China, Intel is perfectly poised to take advantage of the West’s desire to ensure that critical semiconductor manufacturing can take place in home territory.

“Intel is in a unique position to rise to the occasion and meet this growing demand while ensuring a sustainable and secure supply of semiconductors for the world,” said Gelsinger at the Unleashed event.

In terms of tech, Intel has not indicated precisely what products the foundry will be focused on, but Gelsinger confirmed the use of extreme ultraviolet lithography (EUV). The custom chips are expected to be sold to Western governments and tech companies like AMD, Nvidia, and even Apple – putting Intel in direct competition with TSMC and Samsung.

However, despite the optimism around Intel’s big foundry plans, questions remain around the firm’s future as an integrated device manufacturer (IDM).

Apple’s game-changing ARM-based system on a chip (SoC) designs are thought by many to have rendered Intel’s x86 processor design obsolete. Now with the new foundry play, Intel is showing strength, but the pressure is on to prove that its 7nm chips can retain the superior performance that has helped it to dominate the chip market over the last few decades.

Matthew Byatt, Managing Partner and Semiconductor Practice Lead at Acuity Advisors comments:

“Intel, America’s only hope of closing the gap with both TSMC and Samsung, is talking a good game. However, in light of TSMC’s recent commitment to invest $100bn in capacity, Intel still isn’t betting big enough. Regardless, all this investment can only be good news for the entire semiconductor ecosystem.”

Matthew Byatt, Partner

Matthew Byatt, Managing Partner

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