Intel Foundry
Stratechery has, from the beginning, operated with a great degree of reverence for tech history; perhaps that’s why I’ve always been a part of the camp cheering for Intel to succeed. The unfortunate fact of the matter is that the need for cheerleading has been clear for as long as I have written this blog: in May 2013 I wrote that Intel needed to build out a foundry business, as the economics of their IDM business, given their mobile miss, faced long-term challenges.
Unfortunately not only did Intel not listen, but their business got a lot worse: in the late 2010’s Intel got stuck trying to move to 10nm, thanks in part to their reluctance to embrace the vastly more expensive EUV lithography process, handing the performance crown to TSMC.
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Intel’s is technically on pace to achieve the five nodes in four years Gelsinger promised (in truth two of those nodes were iterations), but they haven’t truly scaled any of them; the first attempt to do so, with Intel 3, destroyed their margins. This isn’t a surprise: the reason why it is hard to skip steps is not just because technology advances, but because you have to actually learn on the line how to implement new technology at scale, with sustainable yield. Go back to Intel’s 10nm failure: the company could technically make a 10nm chip, they just couldn’t do so economically; there are now open questions about Intel 3, much less next year’s promised 18A.
CNBC (via Hacker News):
Intel said it’s creating a separate entity for its foundry business, a structure that could allow it to raise outside funding.
The chipmaker has spent roughly $25 billion on the foundry business in each of the past two years.
The company’s stock has lost almost 60% of its value in 2024.
Pat Gelsinger (via Hacker News):
Specifically, Intel Foundry will produce an AI fabric chip for AWS on Intel 18A. We will also produce a custom Xeon 6 chip on Intel 3 that builds on our existing partnership, under which Intel produces Xeon Scalable processors for AWS. More broadly, we expect to have deep engagement with AWS on additional designs spanning Intel 18A, Intel 18AP and Intel 14A.
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Earlier today, we also announced that Intel has been awarded up to $3B in direct funding under the CHIPS and Science Act for the U.S. government’s Secure Enclave program. This program is designed to expand the trusted manufacturing of leading-edge semiconductors for the U.S. government.
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To build on our progress, we plan to establish Intel Foundry as an independent subsidiary inside of Intel. This governance structure will complete the process we initiated earlier this year when we separated the P&L and financial reporting for Intel Foundry and Intel Products.
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Through our voluntary early retirement and separation offerings, we are more than halfway to our workforce reduction target of approximately 15,000 by the end of the year.
Tim Culpan (via Hacker News):
TSMC’s first Arizona chips are now in production, and Apple is ready to be the first cab off the rank with mobile processors made using the foundry’s 5nm process.
Apple’s A16 SoC, which first debuted two years ago in the iPhone 14 Pro, is currently being manufactured at Phase 1 of TSMC’s Fab 21 in Arizona in small, but significant, numbers, my sources tell me. Volume will ramp up considerably when the second stage of the Phase 1 fab is completed and production is underway, putting the Arizona project on track to hit its target for production in the first-half of 2025.
WSJ (via Hacker News):
Chip giant Qualcomm made a takeover approach to rival Intel INTC in recent days, according to people familiar with the matter, in what would be one of the largest and most consequential deals in recent years.
A deal for Intel, which has a market value of roughly $90 billion, would come as the chip maker has been suffering through one of the most significant crises in its five-decade history.
Previously:
Update (2024-09-25): Richard Lawler and Sean Hollister (via Hacker News):
If a deal were made — and survived regulatory scrutiny — it would be a massive coup for Qualcomm, which reentered the desktop processor market this year as a part of Microsoft’s AI PC strategy after years of dominance in mobile processors.
Previously:
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Intel spun off their second-rate fab division so they can focus on what they do best: second-rate processor design.
>thanks in part to their reluctance to embrace the vastly more expensive EUV lithography process
Again, not true.
