Intel: The Unimaginable End-Game

Intel has shocked everyone by saying it will look for foundry for its new products now that yields on its 7nm process are a year behind schedule and upcoming products will be six months late.

Coming on the back of the three year delay in the 10nm process, this looks as if Intel is giving up on having leading-edge process technology.

The extraordinary thing is that Intel is giving up on process at a time when it’s making a lot of money  – Q1 revenues of nearly $20 billion for a profit of $5 billion.

With all that money, why, one wonders, can’t Intel keep up in the process race?

Is it because it has denied its process development people money in favour of spending on dividends, share buy backs and acquisitions?

Is it because the CEOs from Otellini onwards have not had the technological smarts to oversee the process people effectively?

Is it because Intel has sacked too many of the wrong people?

Is it because of  Intel’s traditional belief that it can do everything by itself without help from outside? 

Is it because Intel has failed to master EUV deployment?

No one knows but, if Intel has to put its leading edge parts out to foundry, then the financial justification to build new fabs is gone.

And that’s the end of that – Intel becomes another fabless company relying on design and marketing to turn a buck and leaving Samsung and TSMC as the only companies making leading edge logic.

And this is all happening as the US Congress looks at passing big spending bills to revive semiconductor manufacturing in the USA


Comments

3 comments

  1. Yes robetc but Intel knows that the advantages of having leading edge processes are diminishing node by node. If leading edge is such a big deal how has Intel held onto 98% of the server business? For many years Intel led in process and the rest of the industry reaped the trickle-down benefits of Intel’s pioneering – so Intel knows how to play that game and may reap bigger profits while TSMC/Samsung shoulder the process burden.

    • I noticed another thread discussing this and I suspect you have a very good point. What a culture shock for Intel, and what does it do for reviving US on-shore fabrication?

  2. Could politics be in the picture? Pure speculation, but what would the effect be on Trump’s desire to bring US chip manufacturing on-shore? Is there an element within Intel that is deeply disturbed by the prospect of the orange lunatic waving his blunderbuss around? On the other hand, if there is a threat they will fail, could there be the prospect of more treasury cash coming their way to help keep the US in the game? Don’t you love a good conspiracy theory?

    On the other hand you may well be right about dividends v investment, but then you would have to question management competence. History demonstrates that if chip makers don’t pursue leading edge process their dividends will ultimately fail.

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