Intel signs Microsoft as foundry client; It claims it is on track to overtake arch-rival TSMC

Intel said on Wednesday that Microsoft plans to use its services to manufacture a custom computer chip and that the company expects to beat an internal deadline of 2025 to outpace its biggest rival, Taiwan Semiconductor Manufacturing Co, in advanced manufacturing of chips.

The US chipmaker also gave new details on how it plans to maintain its lead over TSMC through 2026 and beyond.

Intel made the revelations at an event in San Jose, California, at the first technology conference for Intel Foundry, the contract manufacturing operation it created to compete with TSMC.

Intel says it plans to retake the mantle of producing the world’s fastest chips from TSMC later this year with what it calls Intel 18A manufacturing technology and extend that advantage through 2026 with a new technology called Intel 14A .

He said Microsoft will use its 18A technology to make an undisclosed chip and that it now expects $15 billion in foundry orders, up from the $10 billion the company previously told investors to expect.

TSMC said it had “no comment on the competitiveness of our advanced technologies” beyond what CEO CC Wei said at the company’s most recent investor conference in January.

TSMC’s Taipei-listed shares have jumped nearly 17% so far this year due to its dominance in making the kinds of advanced chips used in AI applications by companies such as Nvidia.

The news of the 14A technology is the first time the Silicon Valley company has detailed its plans beyond 2025, the deadline Intel CEO Pat Gelsinger had set to reclaim the chipmaking crown when took over the reins three years ago.

For decades, Intel made chips for itself and used its manufacturing leadership to create a cycle where it made chips with industry-leading performance and charged a premium for them. These margins, in turn, helped finance advances in production. But as Intel lost its manufacturing lead, its chips became less competitive and margins fell, draining a source of funding to rebuild production.

Intel is now relying on potentially billions of dollars in subsidies from the US government and business from outside customers to help it get back on track.

It hopes some customers will be drawn to its long history of operating cutting-edge factories on multiple continents, especially those who have concerns about TSMC’s practice of keeping its most advanced factories clustered in Taiwan.

“It’s a commercial that resonates right now. People want that,” Intel Foundry CEO Stu Pan said of the company’s geographic diversity.

Intel says it has four “major” customers signed up for its 18A manufacturing technology, but has yet to name them. It is unclear whether Microsoft is among those financially important customers.

Intel said on Wednesday that it is partnering with Arm Holdings to facilitate the production of chips with Arm technology in its factories. Intel also said it will work with the University of California, Berkeley and the University of Michigan to allow students to access their 18A manufacturing technology.

Intel also has a special technology that analysts say will be useful in speeding up power-hungry AI chips. Nvidia, the market leader in AI chips, has said it is evaluating Intel’s manufacturing technology, but the two companies have not announced a deal.

Intel’s effort to attract outside customers “is the key to the turnaround story,” said Ben Bajarin, chief executive of consulting firm Creative Strategies.

“Unfortunately, that’s an unanswered question because it’s a two- to three-year journey before we have any idea that this is working.”

© Thomson Reuters 2024

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