Intel mulls outsourcing some chip production to TSMC

AppleInsider

Intel is considering outsourcing some of its chip production to Apple supplier TSMC, but is currently holding out in hopes that its own manufacturing capabilities improve.

Credit: Intel

Successive delays in the company's chip fabrication processes have spurred it to look at outsourcing options. Intel CEO Bob Swan had previously told investors that he will announce the company's plans for outsourcing and getting production back on track at the chipmaker's earnings call on Jan. 21.

But, according to a Bloomberg report Friday, Intel has yet to make a final decision about outsourcing less than two weeks ahead of that announcement.

Any chips or other components that Intel would source from TSMC wouldn't arrive on the market until 2023 at the earliest. Those chips would also be based on existing manufacturing processes used by other TSMC customers.

According to Bloomberg, TSMC is preparing to offer Intel chip making capabilities based on a 4-nanometer process with initial testing using a 5-nanometer process.

Intel is also reportedly in talks with Samsung, though those discussions are reportedly at a much more preliminary stage.

Although one of the world's best-known chipmakers, Intel has suffered years-long delays that have caused it to lag behind rivals in the industry. Some of those rivals design their own chips but outsource fabrication to TSMC.

News of the potential outsourcing also comes amid Apple's own transition from Intel processors to proprietary Apple Silicon in its Mac devices.

Alongside with investor concerns about Intel's stagnation, CEO of hedge fund Third Point, Daniel Loeb, in December urged the chipmaker to take strategic action in the face of its declines.

This isn't the first time that Intel has tapped TSMC for chip fabrication. Back in 2018, Intel outsourced some of its 14-nanometer chip production because of high demand and manufacturing issues.

wood1208

If you can't fight, join. Buy time until Intel can get it's fab in order to compete.

mobird

Maybe Apple should buy Intel...
And show them how it is done.
/jk about Apple buying Intel.

wood1208 said:
If you can't fight, join. Buy time until Intel can get it's fab in order to compete.

edited January 2021

sflocal

My oh my, how Intel has fallen from grace.

My understanding is that Apple has pretty much purchased all of TSMC's production capacity for the year right?  It would be kind of funny if Intel gets put at the back of the line.

gregoriusm

sflocal said:

My oh my, how Intel has fallen from grace.

My understanding is that Apple has pretty much purchased all of TSMC's production capacity for the year right?  It would be kind of funny if Intel gets put at the back of the line.

I think Apple have purchased the 5 nm capacity while others have to use the older processes. 

macpro

gregoriusm said:

sflocal said:

My oh my, how Intel has fallen from grace.

My understanding is that Apple has pretty much purchased all of TSMC's production capacity for the year right?  It would be kind of funny if Intel gets put at the back of the line.

I think Apple have purchased the 5 nm capacity while others have to use the older processes. 

Hopefully, all the 4, 3, 2, and 1 nm too.

cloudguy

What decline is this person speaking of? Quantify it. Also Apple doesn't have all of TSMC's 5nm capability. They arr making 5 nm chips for AMD and would have had capacity for Qualcomm had Qualcomm been willing to pay a bit more and countenance limited availability for about a month. Qualcomm is expected to go back to TSMC for the Snapdragon 898 in 2022.

Also the reason for the 2023 thing is that Intel doesn't have a 5nm design yet. They have 10nm designs that they cannot manufacture anything bigger than 4 cores in large yields and 7nm designs that they cannot manufacture at all.

While everyone is concern-trolling Intel no one is facing reality. Which is:

1. There is no mass migration from Windows to macOS underway and isn't going to be. If anything Windows is losing more share to ChromeOS than Windows, and thanks mostly to Google and Samsung being stupid nearly all Chromebooks use Intel also.

2. While AMD is a formidable competitor in theory in practice they cannot make enough chips to keep up with demand. Why? Because AMD's chips are made by TSMC like everyone else and AMD will not pay Samsung to help them increase volume. So OEMs have to choose between massive availability for Intel's 14 nm chips that they can have today or getting in line for AMD's 7nm chips that they can get maybe next year. Thid doesn't affect Apple because their 6-7% market share for devices that start at $999 allows them to pay to be front of the line. If you make Windows, ChromeOS or Linux PCs you are part of the 93% share with devices that start under $200.

So before you start talking about Intel's decline, provide some DATA on increased macOS market share AND their only competitor AMD signing a deal with Samsung that would allow them to double the volume of Ryzen chips they can put on the market. As it is, AMD can't even keep up with the demand for XBox and Playstation APUs (what the x86 world is calling CPUs and GPUs on the same physical chip) to the point where Microsoft publicly called them out, let alone the 250 million x86 PCs that move in a given year.

As far as Daniel Loeb goes, I bet he is just a Mac and iPhone guy anyway. He wants Intel to get into the ARM business. Which makes no sense ... we don't even know how a 5nm Intel Core i5 with an octacore big.LITTLE architecture would perform yet. Also coming out with a better ARM design than Samsung and Qualcomm would take years - AMD already started years ago but haven't decided whether to take it to market - and even if they do who is going to make it? If they make ARM chips on their existing 14nm node or their troubled 10nm node that accomplishes what, exactly? Samsung and TSMC are well into initial runs of their 3nm process and will start producing their first batches next year.

If Loeb has ideas on finding a chip fab that can manufacture the 10nm and 7nm volume that they need, then he should share them. Otherwise he is just seeking publicity for himself by endorsing the public consensus that is generated by Apple fans in the media using bad information. 

rayz2016

sflocal said:

My oh my, how Intel has fallen from grace.

My understanding is that Apple has pretty much purchased all of TSMC's production capacity for the year right?  It would be kind of funny if Intel gets put at the back of the line.

I’ve often preached the theory that companies have a lifecycle: they do amazing things in the early years, then become lazy and complacent, then ease back into an armchair – still making money from past successes but not really making the impact they used to. 

Apple seems to have avoided this (so far) by becoming a completely different company every ten years. 

blastdoor

sflocal said:

My oh my, how Intel has fallen from grace.

My understanding is that Apple has pretty much purchased all of TSMC's production capacity for the year right?  It would be kind of funny if Intel gets put at the back of the line.

It sounds like Intel would be getting access to a process that Apple will have left behind by then. I’d expect Apple to be using 3nm in 2023.

This will mean Intel is on the same process as AMD. That’s what people in the English teacher business call irony https://www.youtube.com/watch?v=s3YdjD0OyJc

georgebmac

Rayz2016 said:

sflocal said:

My oh my, how Intel has fallen from grace.

My understanding is that Apple has pretty much purchased all of TSMC's production capacity for the year right?  It would be kind of funny if Intel gets put at the back of the line.

I’ve often preached the theory that companies have a lifecycle: they do amazing things in the early years, then become lazy and complacent, then ease back into an armchair – still making money from past successes but not really making the impact they used to. 

Apple seems to have avoided this (so far) by becoming a completely different company every ten years. 

My theory is an extension of that:   The Great Companies -- from Rockefeller's Standard Oil to Elon Musk's Tesla -- are under the control of great Owner-Operators.   As they die and retire that company splits into owners only interested in short term profits and professional managers and administrators reporting to them -- and it devolves into mediocrity.

Apple has, so far, escaped that route because Tim has replaced Steve not as a professional manager reporting to stock holders (which he partially does) but has been able to retain his position as one who loves the company and what it stands for and, like Steve, has made it his life's mission to grow and propagate that company and its values.   He isn't focusing on making the company profitable as much as he is focusing on making the company great (of which being profitable is only one part).

jcc

The real story here is that we’re so stupid that we can’t beat the Chinese at manufacturing cutting edge chips, at any price. We invented this industry and now we’ve lost it. Does no one else feel the shame?

jwsc

cloudguy said:

What decline is this person speaking of?

...

Dude, a chip architecture and power management earthquake just occurred.  Intel has been caught flat footed with nothing to counter it in the near or medium term.  Have you been sleeping?

larryjw

Maybe the headline is overly dramatic, or simply inaccurate? 

Intel "hopes" to get their manufacturing process functioning?

So, what has Intel been doing for the last decade? Building mansions for the suits? Building mansions for their big investors? Drunk on their previous success? Successfully lobbying for tax cuts to make their bottom lines look like they weren't a decaying and decrepit company?

Well, it does seem so. So, move their operations to a country where they care more about manufacturing quality goods, than their bank account. 

9secondkox2

Intel must realize things aren’t going to msgically improve without pulling out all the stops and making huge investments. They just lost a big and growing customer. 

They also need to consider their manufacturing and software partners for the future. Apple caused a paradigm shift very quickly. 

This is the time for Intel to make bold moves. Not hope for the best or stay the course. 

If they haven’t already been plotting their own game change, then they are already years behind. And that’s frightening in the tech game. 

I don’t want Intel to fail. They have been a staple of tech for so long. Would be great to see them get agile, innovative, and diverse in their architecture. 

georgebmac

jcc said:

The real story here is that we’re so stupid that we can’t beat the Chinese at manufacturing cutting edge chips, at any price. We invented this industry and now we’ve lost it. Does no one else feel the shame?

That just goes along with a long list -- from steel to bicycles.

But it didn't start with the Chinese.  It started with the Japanese.  And, neither will it end with the Chinese.   Industry will always migrate to where they get the best product at the lowest cost.  

We pride ourselves on free market capitalism but get all pissy when it doubles back and bites us in the ass.

sflocal

cloudguy said:

What decline is this person speaking of? Quantify it. 

*rolls eyes*

tmay

jcc said:

The real story here is that we’re so stupid that we can’t beat the Chinese at manufacturing cutting edge chips, at any price. We invented this industry and now we’ve lost it. Does no one else feel the shame?

For the record, TSMC is Taiwanese, not Chinese, and the U.S., many years ago, encouraged Taiwan to get into semiconductors, and this is the result. The U.S. hasn't "lost" since Intel is still a very capable company, but it would make sense for the U.S. to have an industry policy of leading the world in semiconductors, for a host of reasons. I would also note that South Korea, with Samsung, is also a strong player in semiconductors.

edited January 2021