IC Manufacturing as a Service — Intel Edition

Alpine Inn, Portola Valley, CA
Intel Q3'21 Revenue

What the future holds for Intel in 2024

  1. Getting worse before getting better. As Gelsinger suggested, it takes 2–3 years to build a few fab, and even longer for a modern mega-fab. In his ambition, Intel will catch up by 2024 & maybe an unquestioned leader in 2025. Because by then, 3 new factories should solve Intel CPU shortage problems. And, it may either have the surplus to either serve Intel Foundry Service (IFS) business or play pricing games to squeeze competitors.
  2. High margin no more. As System on Chip (SoC) has outperformed Intel’s discrete CPU architecture in terms of performance per watt & unit cost. It’ll be very hard for Intel to reclaim the lost lands anymore. Intel has to compete much harder from now on, and “competition is the loser’s game”. For example, the high margin IC has to be built by the advanced chip fabrication technology (< 10nm), and TSMC leads with more than 80% of the market share in 2020. Even Intel just renamed its process nodes, Intel 7, 4, etc. to align with TSMC & Samsung, Which may make marketing sense, Intel still has many to do & build beyond marketing. It takes much more for the B2B business than the consumer marketing, that Intel used to do well, e.g. Intel inside.
Visual Capitalist: Projected Construction of new IC factory(2021–22)

Unbundling manufacturing from design

Accenture: The inverted pyramid of semiconductors companies to fabrication houses.
  1. Intel should make its high-end CPU in-house because it’s highly interdependent on advanced Intel manufacturing technology & capability. Vertically integrated have been giving Intel edges on time to market & performance. Because the high-end CPU is the core business to Intel & built the brand to sell more mid & low-end CPUs, Intel has to lead. And IC fabrication & even packaging technologies are the keys to lead.
  2. Whereas other chips & even low-end CPUs are “modular enough” to outsource because TSMC& etc. have created great “interfaces” to unbundle the manufacturing from the design for a while. For example for GPU, TSMC’s manufacturing technology & capability have been great in serving top GPU vendors: Nvidia & AMD. Also, TSMC & Samsung are competing in the manufacturing service business. Intel’s investment in such an area will make it even more “Performance Surplus”. Therefore, if Intel wants to complete better on GPU, it better focus on design or other core competencies to differentiate.
The Innovator’s Solution: Product Architecture & Integration

Pivoting for a better future

Given time semiconductor sales eventually recover to higher levels than before

2 is better than 1?

Reduced IC Unit Costs & Increasing Capabilities Drive New Applications

Full Disclosure

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A Taiwanese lives in Silicon Valley since 2014 & has random opinions on some stuff. The opinions shared here are my own, not those of companies I work for.

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Sam Lin

Sam Lin

A Taiwanese lives in Silicon Valley since 2014 & has random opinions on some stuff. The opinions shared here are my own, not those of companies I work for.

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