Intel's New CEO Explores Big Shift In Chip Manufacturing Business

An anonymous reader quotes a report from Reuters: Intel's new chief executive is exploring a big change to its contract manufacturing business to win major customers, two people familiar with the matter told Reuters, in a potentially expensive shift from his predecessor's plans. The new strategy for Intel's foundry business would mean offering outside customers a newer generation of technology, the people said. That next-generation chipmaking process, analysts believe, will be more competitive against Taiwan Semiconductor Manufacturing Co in trying to land major customers such as Apple or Nvidia.

Since taking the company's helm in March, CEO Lip-Bu Tan has moved fast to cut costs and find a new path to revive the ailing U.S. chipmaker. By June, he started voicing that a manufacturing process known as 18A, in which prior CEO Pat Gelsinger had invested heavily, was losing its appeal to new customers, said the sources, who spoke on condition of anonymity. To put aside external sales of 18A and its variant 18A-P, manufacturing processes that have cost Intel billions of dollars to develop, the company would have to take a write-off, one of the people familiar with the matter said. Industry analysts contacted by Reuters said such a charge could amount to a loss of hundreds of millions, if not billions, of dollars.

Intel declined to comment on such "hypothetical scenarios or market speculation." It said the lead customer for 18A has long been Intel itself, and it aims to ramp production of its "Panther Lake" laptop chips later in 2025, which it called the most advanced processors ever designed and manufactured in the United States. Persuading outside clients to use Intel's factories remains key to its future. As its 18A fabrication process faced delays, rival TSMC's N2 technology has been on track for production. Tan's preliminary answer to this challenge: focus more resources on 14A, a next-generation chipmaking process where Intel expects to have advantages over Taiwan's TSMC, the two sources said. The move is part of a play for big customers like Apple and Nvidia, which currently pay TSMC to manufacture their chips.

Reaping what they sow during the Wintel era

[sodul]

I'm surprised that x86 is still a thing. It is pretty clear that ARM chips now able to run circles around Intel chips both on the portable and the server market, especially when you consider the compute per watts.

Now, I got some Intel shares last month because, just like the big banks and the Detroit car manufacturers, I believe they are Too Big To Fail and will likely get bailed out by our tax dollars when it comes to it. I mean they first hit $20 a share in 1997, peaked at $75 in 2000, and have been mostl

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[ndsurvivor]

too big to fail, is another word for Communism for the Rich. However, I believe that Intel went to Reduced Instruction Sets a long time ago, the x86 was translated, and then backed out into some stupid bytes and bits outside.

Re:

[sodul]

Yeah, I do not like the bailouts, but if my tax money is going to pay for the bailouts I want to get some of that back in my pocket. I only invested $12k, so not a massive investment, and I don't expect a 10x return either. I do think there is potential for 2-3x in 5y if they start getting their act together. The main problem is that employee morale is low, and they are going to have a hard time keeping the good employees that can get things done.

With the increased tension with eastern powers, having solid

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[Anonymous Coward]

x86 is still the best performing CPU out there, which is ironic. It burns watts like no tomorrow, but if one wants performance, it is still top dog. I think this will probably change. China is doing incredible things with RISC-V, ARM is getting there, and Intel (IMHO) has destroyed any R&D that might give them a relevant future.

The stupid thing is that Intel had it in the bag. They had X86S, to replace the ISA with something a bit more modern, they had Optane, which fills a very important gap, they

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[rickb928]

In sports it is a paradigm that there is no substitute for speed.

Same thing for computers. More wide receivers doesn't solve the speed problem for American football, it just spends resources elsewhere on the field with different results. In the CPU, not-as-fast just means, as pointed out elsewhere, even more instances are necessary, and so more resources are needed for that.

And if you are not paying attention, you may not see the light coming down the tunnel that is RISC-V. It will be optimized, enhanced, i

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[itsme1234]

Despite what the unbelievably pushy marketing campaign from Qualcomm last year would mislead you to believe in Windows world ARM is still an unbelievably tiny niche. It's a tiny minority where they even offer devices at all, that is for relatively expensive light laptops (and a handful of Windows tablets, which are mostly used with a keyboard too, and very often called "laptops" too). Even there they're barely fit for purpose, with basic, consumer software dragging its fit to deliver something usable, like

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[drinkypoo]

I'm surprised that x86 is still a thing. It is pretty clear that ARM chips now able to run circles around Intel chips both on the portable and the server market, especially when you consider the compute per watts.

Square footage still matters and per thread performance still matters. ARM is way behind on both, to get the same performance you need more machines and that means more management and real estate costs.

Now, I got some Intel shares last month because, just like the big banks and the Detroit car manufacturers, I believe they are Too Big To Fail and will likely get bailed out by our tax dollars when it comes to it.

Probably true, but I hope you lose that bet.

TSMC ate their lunch.

[ndsurvivor]

TMSC is eating Intels steaks, their fruits, and their veggies.

Re: TSMC ate their lunch.

[Fons_de_spons]

Did some (insignificant) projects with TSMC as a customer. It really is a nice company. However, so was Google. I hope Intel catches up. A bit of competition here is good and avoids over inflated egos trying to change the world in their image.

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[arglebargle_xiv]

I think all Intel has to do is offer the use of their fabs to Huawei and they'd never have to worry about cashflow again.

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[ctilsie242]

Give it a year or two, and SMIC will have a process node good enough that Huawei never has to leave the mainland.

Intel should have been cranking silicon on this node, and the next be showing first silicon, or at least first light.

So much for "more innovation"

[Cyberax]

Pat Gelsinger tried to preserve as much of Intel as possible, even asking people to come out of retirement. Well, now the regular Wall Street managers have arrived to wring Intel out of the last drops of money.

Re:So much for "more innovation"

[ndsurvivor]

This seems to me to be the product of stock buybacks. If you want to make America Great, give money to American Engineers and Scientists! I am not talking about "made up money" that Billionaires get, but money that Americans earn from productivity gains.

Good but also bad.

[Gravis Zero]

While it's good for the company to open their high-end manufacturing to clients rather than than merely making their own CPUs, it's bad to completely scrap the newer development process without an alternative route forward. This will definitely boost profits in the short-term but without investing in a new fab process then those profits will wane.

This does not appear to be a sustainable strategy but rather an approach to cash out. It seems to me that the best way forward would be to decouple their fabrication from their CPU development, much the same way that AMD did.

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[arglebargle_xiv]

the most advanced processors ever designed and manufactured in the United States

Note that qualifier, not "ever designed and manufactured", but a much much narrower "designed and manufactured in the US". Ouch.

Moved fast to cut costs

[RUs1729]

Not to come up with new stuff. Not to be better. Not to create. To cut costs.