Intel Talks With TSMC, Samsung to Outsource Some Chip Production

[Jet_ski]

Summary

Intel Corp. has talked with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. about the Asian companies making some of its best chips, but the Silicon Valley pioneer is still holding out hope for last-minute improvements in its own production capabilities.

 

After successive delays in its chip fabrication processes, Santa Clara, California-based Intel has yet to make a final decision less than two weeks ahead of a scheduled announcement of its plans, according to people familiar with the deliberations. Any components that Intel might source from Taiwan wouldn’t come to market until 2023 at the earliest and would be based on established manufacturing processes already in use by other TSMC customers, said the people, asking not to be identified because the plans are private.

 

Talks with Samsung, whose foundry capabilities trail TSMC’s, are at a more preliminary stage, the people said. TSMC and Samsung representatives declined to comment. An Intel spokesperson referred to previous comments by Bob Swan, the company’s chief executive officer.

 

The world’s best-known chipmaker has historically led the industry in advanced manufacturing techniques, essential for maintaining the pace of performance increases in modern semiconductors. But the company has suffered years-long delays that have put it behind competitors that design their own chips and contract TSMC to do the manufacturing.

TSMC expects to have a new facility in Baoshan operational by the end of this year, which can be converted to production for Intel if required, one of the people said. TSMC executives previously said the new Baoshan unit would house a research center with 8,000 engineers.

 

Quotes

Quote

Swan has promised investors he’ll set out his plans for outsourcing and get Intel’s production technology back on track when the company reports earnings Jan. 21

 

Quote

At subsequent investor conferences, Swan explained that the timing of his decision is driven by the need to order chipmaking equipment to make sure he has enough factory capacity or give a partner enough of a heads-up to make similar preparations. Being able to predictably deliver leading products to customers on time, at the right cost, will determine how much outsourcing Intel uses, he said.

 

My thoughts

On the surface there’s nothing wrong with outsourcing manufacturing. But given Intel’s history this move shows that Intel is admitting they’ve lost a competitive edge they used to enjoy. There are plenty of questions here: will the same chip design be manufactured using different approaches? Will that lead to performance differences? What happens if Intel’s own manufacturing process doesn’t catch up to TSMC or Samsung in the next 12-18 months?

 

Samsung and TSMC have strong partners who are heavily invested with them for the long haul. Intel will lose their price flexibility. They won’t be able to cut prices to compete with AMD without sacrificing their bottom line.

 

Sources

https://www.bloomberg.com/amp/news/articles/2021-01-08/intel-talks-with-tsmc-samsung-to-outsource-some-chip-production

[Kisai]

46 minutes ago, Jet_ski said:

Summary

Intel Corp. has talked with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. about the Asian companies making some of its best chips, but the Silicon Valley pioneer is still holding out hope for last-minute improvements in its own production capabilities.

 

After successive delays in its chip fabrication processes, Santa Clara, California-based Intel has yet to make a final decision less than two weeks ahead of a scheduled announcement of its plans, according to people familiar with the deliberations. Any components that Intel might source from Taiwan wouldn’t come to market until 2023 at the earliest and would be based on established manufacturing processes already in use by other TSMC customers, said the people, asking not to be identified because the plans are private.

 

Talks with Samsung, whose foundry capabilities trail TSMC’s, are at a more preliminary stage, the people said. TSMC and Samsung representatives declined to comment. An Intel spokesperson referred to previous comments by Bob Swan, the company’s chief executive officer.

 

The world’s best-known chipmaker has historically led the industry in advanced manufacturing techniques, essential for maintaining the pace of performance increases in modern semiconductors. But the company has suffered years-long delays that have put it behind competitors that design their own chips and contract TSMC to do the manufacturing.

TSMC expects to have a new facility in Baoshan operational by the end of this year, which can be converted to production for Intel if required, one of the people said. TSMC executives previously said the new Baoshan unit would house a research center with 8,000 engineers.

 

Quotes

 

 

My thoughts

On the surface there’s nothing wrong with outsourcing manufacturing. But given Intel’s history this move shows that Intel is admitting they’ve lost a competitive edge they used to enjoy. There are plenty of questions here: will the same chip design be manufactured using different approaches? Will that lead to performance differences? What happens if Intel’s own manufacturing process doesn’t catch up to TSMC or Samsung in the next 12-18 months?

 

Samsung and TSMC have strong partners who are heavily invested with them for the long haul. Intel will lose their price flexibility. They won’t be able to cut prices to compete with AMD without sacrificing their bottom line.

 

Sources

https://www.bloomberg.com/amp/news/articles/2021-01-08/intel-talks-with-tsmc-samsung-to-outsource-some-chip-production

I'd consider it a temporary move. 

 

While there is nothing wrong with outsourcing to TSMC or Samsung, it leaves them at no competitive advantage to do so long-term, as their competition will be on the same nodes.

[porina]

47 minutes ago, Jet_ski said:

will the same chip design be manufactured using different approaches? Will that lead to performance differences? What happens if Intel’s own manufacturing process doesn’t catch up to TSMC or Samsung in the next 12-18 months?

Fabs aren't like printers, you can't just send out the same design and get something working back. The logical design has to be turned into a silicon design following the particular fab's design rules. In short, this decision wont affect any product you can buy in the next year, or maybe 2 years. We're looking at long term decisions here. Intel has to make the right choices if they expect their own manufacturing to get sorted, otherwise they're going to have to outsource part.

 

On that note, they wont necessarily put the same product on two different fabs, unless they want to do so to mitigate risk. They could for example put some products on one fab, other products on another. So differences would be irrelevant.

 

Intel right now are maybe 2 years, give or take, behind TSMC. I can't see them catching up in 2 years unless they really accelerate their 5nm plans, whatever they are. They will for sure be working hard to narrow the gap. TSMC 5nm was in production last year, and Intel's 7nm to compete with that is next year at best, given that desktop/mobile Alder Lake is on 10nm and due out towards end of year.

[inteli7.Ti]

I guess short-term profit hedge funds really do influence these large companies...

28 minutes ago, porina said:

Intel right now are maybe 2 years, give or take, behind TSMC. I can't see them catching up in 2 years unless they really accelerate their 5nm plans, whatever they are. They will for sure be working hard to narrow the gap. TSMC 5nm was in production last year, and Intel's 7nm to compete with that is next year at best, given that desktop/mobile Alder Lake is on 10nm and due out towards end of year.

Isn't Intel delaying 7nm until 2022 (but given they said this in 2020, it's likely going to be 2023-24)? TSMC is already manufacturing 5nm and is currently working on 3nm. I would say TSMC is ahead by at least 4 years.

[porina]

30 minutes ago, inteli7.Ti said:

I guess short-term profit hedge funds really do influence these large companies...

Intel said they would evaluate the use of external fabs long before that so called investor made any noise. Implication was in addition to, not instead of their own.

 

30 minutes ago, inteli7.Ti said:

Isn't Intel delaying 7nm until 2022 (but given they said this in 2020, it's likely going to be 2023-24)? TSMC is already manufacturing 5nm and is currently working on 3nm. I would say TSMC is ahead by at least 4 years.

Who knows when Intel 7nm will actually go into production, but right now, if they do so in 2022, that'll be roughly comparable to TSMC 5nm which went into production (in however limited volume) in 2020. You can bet Intel are also working on future processes, even if they don't talk about it. They did say before for example that 7nm development was independent of 10nm, so problems with 10nm don't directly affect 7nm. 

[Jet_ski]

2 hours ago, porina said:

Fabs aren't like printers, you can't just send out the same design and get something working back. The logical design has to be turned into a silicon design following the particular fab's design rules. In short, this decision wont affect any product you can buy in the next year, or maybe 2 years.

Obviously it’s not an overnight thing, but they’ve been working on 7nm for years now and supposedly it’ll be completed in the next 12-18 months.

[Taf the Ghost]

I still wonder if Intel isn't just outsourcing Chipsets and other devices to save wafers on their main nodes. That's really been something of an "easy", temporary fix on the table for a while.

[tim0901]

2 hours ago, Taf the Ghost said:

I still wonder if Intel isn't just outsourcing Chipsets and other devices to save wafers on their main nodes. That's really been something of an "easy", temporary fix on the table for a while.

Yeah I personally think that it won't be actual CPUs that intel are outsourcing here. Intel make so many different products that also use their fabs, such as - as you mentioned - chipsets (which they've apparently had a massive shortage of recently) but also FPGAs, ASICs, ethernet controllers, WiFi Chipsets, Cell modems, SSD controllers... It could be anything.

 

A lot of these use older manufacturing processes (even as far back as 45nm) which would be far easier for Intel to shift over given that TSMC's modern nodes are supposedly at full capacity. This would then give Intel the ability to refit these aging facilities for more modern nodes, without having to spend lots of money on construction (and would likely be far quicker to boot).

[Taf the Ghost]

20 minutes ago, tim0901 said:

Yeah I personally think that it won't be actual CPUs that intel are outsourcing here. Intel make so many different products that also use their fabs, such as - as you mentioned - chipsets (which they've apparently had a massive shortage of recently) but also FPGAs, ASICs, ethernet controllers, WiFi Chipsets, Cell modems, SSD controllers... It could be anything.

 

A lot of these use older manufacturing processes (even as far back as 45nm) which would be far easier for Intel to shift over given that TSMC's modern nodes are supposedly at full capacity. This would then give Intel the ability to refit these aging facilities for more modern nodes, without having to spend lots of money on construction.

I did find it kind of weird we hadn't seen Intel do that. Especially when they were supply constrained on 14nm in 2018. They could have moved stuff to TSMC or Samsung's 10nm nodes, which had plenty of space & were cheap to relieve pressure of the "wafer eater" parts.

 

But, Intel wasn't making a lot of good business decisions there for a long time.

[leadeater]

2 minutes ago, Taf the Ghost said:

I did find it kind of weird we hadn't seen Intel do that. Especially when they were supply constrained on 14nm in 2018. They could have moved stuff to TSMC or Samsung's 10nm nodes, which had plenty of space & were cheap to relieve pressure of the "wafer eater" parts.

Intel has, they are a current TSMC customer.

 

Quote

Last week, we reported on Intel’s manufacturing constraints and the difficulties the company faces in ramping up additional 14nm production. Today, a new report claims that the CPU giant will outsource some of its chipset production to TSMC to ease its own capacity woes on 14nm. That’s the word from DigiTimes, which quotes the usual “industry sources” to say that Intel’s overall 14nm chip supply has fallen short by as much as 50 percent — but simultaneously claims that Intel only intends to outsource the production of its H310 and other entry-level chipsets to TSMC. Sources also claim that Intel’s 14nm process could fall short of demand by as much as 50 percent.

https://www.extremetech.com/computing/276690-report-intel-will-outsource-chipset-production-to-tsmc

[Taf the Ghost]

@leadeaterIntel has actually been a long term TSMC client, mostly because they keep buying companies that use TSMC and continue making products on there. ( It looks like Mobileeye and Atlera parts are still mostly on TSMC nodes, but information a little sketchy.) It's just a question of why this didn't happen in 2018 rather than 2020.

[leadeater]

9 minutes ago, Taf the Ghost said:

It's just a question of why this didn't happen in 2018 rather than 2020.

Well because Intel moved chipsets back up a node to fab lines they already had freeing up 14nm capacity. Thing is there has to actually be a benefit or need to use TSMC over their own fabs. Also it was likely far easier to move existing products to a different Intel node than to TSMC at the time and even now.

 

New products using TSMC make a lot more sense, however the upcoming CPU products use the current chipsets. I don't know what Intel may actually be planning to move to TSMC or if it will actually happen but I doubt we'll see them any sooner than 12 months.

 

My gut feel about this is if it happens it's so Intel can decommission older fab lines to start introduction of newer ones and allow their typical research facilities to move on to 7nm. I think all these fab delays has impacted their typical progression plans and they are stuck in a back log and need the ability to move things to the side to allow things to be moved around.

[Taf the Ghost]

2 minutes ago, leadeater said:

Well because Intel moved chipsets back up a node to fab lines they already had freeing up 14nm capacity. Thing is there has to actually be a benefit or need to use TSMC over their own fabs. Also it was likely far easier to move existing products to a different Intel node than to TSMC at the time and even now.

 

New products using TSMC make a lot more sense, however the upcoming CPU products use the current chipsets. I don't know what Intel may actually be planning to move to TSMC or if it will actually happen but I doubt we'll see them any sooner than 12 months.

 

My gut feel about this is if it happens it's so Intel can decommission older fab lines to start introduction of newer ones and allow their typical research facilities to move on to 7nm. I think all these fab delays has impacted their typical progression plans and they are stuck in a back log and need the ability to move things to the side to allow things to be moved around.

The 10nm delays have effected everything, so  that's a good thought. We know they've built out the Hillsboro capacity when it's normally the R&D segment. Chandler has also been stuck in a weird spot for a while, as well.