Unable to bring its production capabilities to a sufficiently competitive level to meet rival AMD, Intel is negotiating with Samsung and TSMC to partially outsource chip production.
Intel spoke with Taiwan Semiconductor Manufacturing Co. and Samsung Electronics about the prospect of hiring Asian factories to make some of its best chips, in the event that the Silicon Valley company’s efforts to improve its own production facilities fail.
With less than two weeks left until the deadline for publishing the business strategy and after successive postponements of new manufacturing processes at factories in California, Intel’s management has not yet made a final decision. What is certain is that even if it opts for the partial outsourcing of chip production, Intel cannot hope to deliver the components manufactured in Taiwan earlier than 2023, the transition being a long one. And in the end, the products will be based on the manufacturing processes already used by other TSMC customers. Without the freedom to customize manufacturing technologies to expose the full potential for performance and efficiency of the chips made, Intel will lose an asset that has been very helpful.
In addition, Intel will have to compete with AMD and other rival companies to reserve available production capacity at semiconductor factories, which involves increased costs and possible constraints on the volume of chips delivered.
According to industry sources, negotiations with Samsung, a company whose manufacturing technologies are lagging behind TSMC, are at a less advanced stage.
Instead, TSMC could provide Intel with a new 4-nanometer manufacturing process, first going through an initial testing stage using a slightly older 5-nanometer process. The company reportedly said it would start testing production of 4-nanometer Intel chips in the Q4-2021 quarter, with a view to starting volume deliveries next year.