Intel may face challenges in providing foundry services

Intel has advanced chip manufacturing technologies, but it may still experience challenges in its bid to provide wafer foundry services to third-party companies, according to sources from the semiconductor industry.

The sources pointed out that Intel is still a “novice” in such a service business model, and is unlikely to be as competitive as its first-tier and second-tier competitors such as TSMC, Samsung Electronics, United Microelectronics Corporation (UMC) and GlobalFoundries.

Clients are unlikely to go to Intel for services unless it can offer quotes that are far more attractive than its competitors’, the sources said.

Since Intel is still integrating its foundry supply chain and ecosystem, the company will find it difficult to cut quotes in the short term, and Intel’s role as a developer of automotive, HPC and AI chips may also come into conflicts with clients’ interests, the sources said.

With Intel’s two planned new fabs unlikely to begin volume production until 2024, the newly added capacity may see weak utilization as the current shortfall in wafer foundry supply may already have eased by then, the sources said.

Intel’s new IDM 2.0 strategy has obtained support from companies including Amazon, Cisco, Ericsson, IBM, Google, Microsoft and Qualcomm with Intel planning to invest US$20 billion to build two new wafer foundries in Arizona to manufacture its products and to provide services to its clients. The fabs are scheduled to begin operation in 2024. DigiTimes

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