Intel discussed outsourcing some of its advanced electronic components production with Taiwanese Semiconductor Manufacturing Company (TSMC) and Samsung, reports Bloomberg. The chipmaker wants to continue utilizing its own integrated fabrication processes, but it is contemplating shaking up its traditional output model because of problems with its node development.
Intel CEO Bob Swan said he would reveal his firm’s future manufacturing plans with its Q4 2020 earnings announcement, scheduled for January 21.
Intel, TSMC and Samsung Outsourced Chip Production Negotiations
Bloomberg indicated Intel and TSMC’s negotiations are rather far along and have included product fabrication schedules.
The Taiwanese foundry reportedly told the American corporation it could task one of its Hsinchu facilities with making its advanced chips. The company’s fab has the capacity to support 8,000 engineers and should open by year’s end.
TSMC also reportedly offered to use one of its 5nm nodes for test purposes. Subsequently, the firm would utilize its 4nm process to manufacture Intel’s new components at volume. The foundry plans to begin 4nm mass production in 2022. That means the new Taiwanese company would begin shipping some of its partner’s lineup in 2023.
Intel’s discussions with Samsung are said to be at an earlier stage. The two corporations’ talks could be less involved because the South Korean conglomerate lacks TSMC’s technological sophistication. The firms also make system-on-a-chips (SoCs) for some of the same markets, including the automotive sector.
Why Intel is Considering Outsourcing Some Product Manufacturing
For decades, Intel reigned as the world’s top processor company because of its advanced capabilities and offerings. As an integrated manufacturer, its design teams could craft their products in line with their nodes. Its development model and innovations in engineering allowed it to outpace its competition.
However, the corporation has encountered some significant challenges in recent years that have affected its market-leading status. Most prominently, Intel no longer has the most advanced chip fabrication technology on Earth. The firm delayed the launch of its 10nm products for three years due to production issues. Similarly, the company has not been able to launch its 7nm SoCs yet because of low yield problems.
TSMC and Samsung have lapped Intel in node complexity while the latter battled operational chokepoints. Both chipmakers can mass-produce 5nm products and are aggressively working on their next-generation manufacturing processes. Since Advanced Micro Devices (AMD) hired TSMC to make its components, it has already launched its 7nm products.
In addition, the corporation is now facing competition from some of its former and present clients. Previously an Intel customer, Apple has taken to designing its own smartphone and computer chips and outsourcing their production. Similarly, Amazon developed components to power parts of its web services workloads.
At present, Intel has an 80 percent share of the global PC and data center chip markets. But its position is at risk if it cannot find a way to upgrade its output to meet consumer expectations. Although it goes against its history, the firm has ample reason for outsourcing production for its most advanced semiconductors.