Intel Still a Novice in the Contract Manufacturing Market, Unlikely to Pose a Threat to TSMC and Samsung: Experts

Intel’s IDM 2.0 model not only includes an ambitious roadmap to become the most advanced foundry in the next five years but also plans to compete in the contract manufacturing market, alongside TSMC and Samsung. While TSMC is a pure-play foundry (that is, it makes chips only for third-party clients), Samsung makes silicon for both external clients as well as its own mobile SoCs. Intel, on the other hand, has been using its foundries exclusively for its own processors. Considering this, many industry sources have claimed that the chipmaker will find it difficult to compete in the contract manufacturing market.

Calling Intel a “novice” in the contractual service business model, sources close to DigiTimes believe that Intel won’t be as competitive as existing market leaders such as TSMC, Samsung, and even UMSC. The primary reason pertains to the prices that it can offer clients. Fabless chipmakers are unlikely to opt for Intel unless it can promise competitive pricing that’s more attractive than existing heavy-weights.

While this might just have been viable in the present market due to the global chip shortages, most of Intel’s advanced process fabs will only become operational at least two years from now. By then, the shortages will have almost certainly subsided, thereby taking Intel’s primary advantage away.

Intel’s IDM 2.0 strategy mainly relies on subsidies from Western governments and peers who’d prefer to have production based out of the US or Europe, rather than China or Taiwan. The promise of more jobs, an increased stake in the industry, and more secure infrastructure are some of the key arguments put forward by the group.

However, the fact is that Intel is still integrating its foundry supply chain and ecosystem, and it’ll be hard to offer competitive quotes to clients in the beginning. Furthermore, the company’s data center and automotive offerings are going to prevents some of the more prominent fabless companies such as NVIDIA from working with it.

Intel’s IDM 2.0 model has already obtained support from multiple American companies such as Amazon, Cisco, Ericsson, IBM, Google, Microsoft, and Qualcomm. Intel is planning to invest US$20 billion to build two new wafer foundries in Arizona to manufacture advanced 7nm chips to compete with the likes of TSMC and Samsung.


Areej Syed

Processors, PC gaming, and the past. I have been writing about computer hardware for over seven years with more than 5000 published articles. Started off during engineering college and haven't stopped since. Mass Effect, Dragon Age, Divinity, Torment, Baldur's Gate and so much more... Contact: areejs12@hardwaretimes.com
Back to top button