Intel Considers Outsourcing Chip Production to Third-Party Fabs

[Tsing]

Image: Intel



Oh, how the mighty have fallen (or, at least, is falling). We posted a story earlier today about how Intel’s 7 nm processors wouldn’t see the light of day until 2022 or 2023, and the ramifications of this hiccup appear to be snowballing at a disturbing rate. In a separate conference call with analysts (via Bloomberg), CEO Bob Swan admitted that Intel was considering outsourcing CPU production, which seems to confirm how screwed up things are at what was once the world’s top chipmaker. Obviously, this would change Intel fundamentally – the company has always benefited from chip design and in-house production.



“To the extent...

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[Dan_D]

It wouldn't surprise me. Frankly, until Intel can get it's own fab issues sorted out, this is what they'll have to do in order to remain competitive. It's falling further and further behind as everyone else transitions to 7nm and similar processes. Meanwhile Intel's still mostly stuck at 14nm+++++++++++++++ or whatever it is now.

 

[Armenius]

That answers my question in the earlier thread about Intel outsourcing some production.

 

[Chimpee]

I am surprised Intel didn't pull this move earlier for their latest and greatest architecture. I get it that TSMC wouldn't able to fulfill all of existing Intel orders but at least they able to use their latest process nodes for their highest margin products and also give AMD less fab capacity with TSMC which will limits their growth.

 

[Dan_D]

I am surprised Intel didn't pull this move earlier for their latest and greatest architecture. I get it that TSMC wouldn't able to fulfill all of existing Intel orders but at least they able to use their latest process nodes for their highest margin products and also give AMD less fab capacity with TSMC which will limits their growth.

I think Intel has been holding out hope that they'd get their **** together on their manufacturing front. Intel has enjoyed decades of manufacturing dominance, and for some reason, they just can't get things sorted out. Outsourcing is the last thing Intel wants to do, as it has less control over everything including costs, but at this point they probably have little choice.

 

[Uvilla]

I still wonder if that some reason is forced ranking.. the slow moving, unstoppable train wreck that forced ranking is.
I mean i wonder if they use it ( internet points at yes)... I don't mean to question the destruction forced or stacked ranking would create, that's a guarantee... It they are too stupid not to know this, therye zero long term hope for Intel... Expect government socialism to save Intel in about 5 years.

 

[Brian_B]

My suspicion:

Intel is publicly traded, so that governs a lot of the direction they will take as a company.

They enjoyed a long dominance on the PC/Server Market. Wall Street doesn't really reward dominance though, they reward growth over everything. Being a leader in a stagnant market doesn't push your stock price higher.

So, in order to appease shareholders, Intel gutted R&D on the PC/Server front (why waste money when you are so far ahead), and invested it into attempts to drive growth:
Push into anti-virus/PC protection (McAfee Aquisition)
Push into graphics (Larrabee, Xe)
Push into ultraportables and mobile (Atom)
Push into "Gaming" (Bigfoot aquisition)
Push into autonomous cars (MobileEye aquisition)
Still not sure what the Altera acquisition was meant to do (not necessarily a critisicim of Intel here, I just don't understand the tech enough), but that cost a fortune (~17B+)

The problem is, Intel is horrible at pretty much everything outside of PC/Server markets. Their growth initiatives have played out pretty poorly.