Report: Intel contracts TSMC to fabricate advanced CPUs starting in 2H21

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Intel lands US Defend Department advanced semiconductor packaging contract
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Trendforce recently reported Intel has contracted Taiwanese Semiconductor Manufacturing Corporation (TSMC) to fabricate its advanced central processing units (CPUs).

The research organization stated TSMC would begin mass-producing i3 CPUs with its 5nm node in the second half of 2021. It further mentioned the foundry would start volume manufacturing on Intel’s mid and high-range CPUs with its 3nm nodes in the second half of 2022.

Intel has also outsourced the manufacturing of 15 to 20 percent of its non-CPU products to TSMC and United Microelectronics Corporation (UMC).

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Why Intel Might Be Outsourcing Some Chip Production

Intel dominated the semiconductor sector for many years because of its best-in-class technology and robust production capacity. However, the corporation has struggled in recent years as manufacturing woes have delayed its new product launches. The firm has also faced competition from pure-play foundries that utilize nodes that exceed the sophistication of its processes.

Intel’s problems have recently come to a head. Its rival, Advanced Micro Devices (AMD), has taken aim at its consumer and data center market share. In addition, former client Apple has taken to designing its own CPUs instead of using third-party hardware.

Earlier this month, reports emerged that Intel entered into outsourcing negotiations with TSMC and Samsung. As both firms have developed successful 5nm nodes, they could offer Intel a multi-generation improvement in fabrication technology. However, the Taiwanese manufacturer likely won Intel’s business because it had space available to fabricate the American company’s products.

Intel likely did not contract UMC to make its CPUs since its nodes are not as advanced as its contemporaries. But the corporation could use its 12nm capacity to fabricate other offerings like its Optane brand 3D Xpoint memory modules.

Moving in the Right Direction

Trendforce offered a forecast for Intel’s future based on its decision to begin outsourcing some semiconductor production.

The research organization anticipates the chipmaker will continue operating as an integrated design manufacturer (IDM) but with a tighter focus. The firm believes Intel will be able to redirect its capital to advanced research and development in the future. It expects the corporation will still make some of its most profitable components in-house.

TrendForce holds that Intel can optimize its production efforts by taking advantage of TSMC’s next-generation packaging services. It also presumes Intel will become more competitive with fabless rivals like AMD by outsourcing some fabrication work.

As it happens, Intel recently announced VMware CEO Pat Gelsinger would become its chief executive in mid-February. As opposed to his predecessor Bob Swan, Gelsinger has a long history in the technology industry. His prior exploits included multiple decades worth of work for his next employer, which included designing the Intel 80486 microprocessor. Given his experience, the executive is exactly the kind of person the chipmaker needs in the big chair.

In light of its structural and leadership changes, Trendforce’s predictions about Intel are likely to be realized. The corporation needed to shake things up on a systemic level to get back on track. Having seemingly done that, it appears poised to regain its market-leading position.

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