Intel placed an order for 180,000 6nm wafers with the Taiwanese Semiconductor Manufacturing Company (TSMC), reports Yahoo! Finance. The Santa Clara, California-based chipmaker’s purchase is set for delivery sometime next year.
Earlier this week, Intel revealed its 7nm products would not be available until 2022 or 2023 due to fabrication problems.
Why Intel Might be Ordering Wafers from TSMC
If Intel has expanded its partnership with TSMC, it likely did so to revitalize its brand.
During a recent investor call, Intel CEO Bob Swan explained his company delayed the release of its new chipsets due to unsatisfactory production yields. He also noted Intel would consider working with outside foundries to meet its commitments to its clients. Those comments caused the firm’s stock to drop by 16 percent because they caused investors to doubt its competitiveness.
For decades, Intel asserted it made best-in-class electronic components because it designed and manufactured its own chips. However, the company’s most sophisticated products use 14nm wafers while other firms offer 5nm and 7nm chipsets. Having twice postponed the release of its next-generation processors, the chipmaker is losing ground to its rivals.
Is Intel Making the Right Call by Outsourcing Production?
Intel’s reported move to have a third-party handle wafer production is not a terrible idea on its face. If the company receives a positive response to its TSMC-made components, it might want to change the way it does business.
Christopher Rolland, a Susquehanna International Group analyst, said its “near impossible” for Intel to catch up to TSMC’s manufacturing sophistication within the next five years. Provided Rolland’s assessment is accurate, the American chipmaker might benefit from selling off its factories. Afterward, the firm could redouble its focus on crafting groundbreaking microelectronics while also shoring up its cash reserves.
Since it already makes some of its processors and FPGAs, TSMC would likely have interest in buying Intel’s fabs. Since the American brand maintains cutting-edge facilities, the East Asian firm would not have to perform extensive retrofitting post-purchase. The manufacturer is currently in the middle of a major expansion phase due to massive demand for its state-of-the-art production processes.
Though it would represent a significant break from its history, Intel has good reason to abandon its manufacturing.