Intel's momentum in securing foundry customers is hindered by the fact that the firm positions itself as both a competitor and a partner, says David Yoffie, a former board member.
NVIDIA, AMD & Qualcomm Might Not Want To Have Their "Secret Sauce" Leaked By Placing Orders at Intel Foundry
After a volatile transitional year marked by Pat Gelsinger's departure, Intel had stabilized under Lip-Bu Tan, an individual known for his transformative leadership. During this time, there was pressure on Intel's new CEO to pursue a foundry spin-off; however, the idea was ultimately abandoned, as Tan was confident that he could turn around the momentum of the semiconductor division. With reports indicating external interest in 14A and 18A chips, Intel's former board member David Yoffie suggests that for the foundry division to succeed, Team Blue needs to handle products and foundry separately.
If I'm NVIDIA or AMD or Qualcomm, do you really want to put your secret sauce into a manufacturing operation where you're giving Intel access to that secret sauce? And that's going to constrain their willingness to give them very high volume. The breakup of foundry and product business is one potential solution that Yoffie wants the board to consider.
If you actually separated the two, I think you'd give Intel a much better shot at being successful.
- David Yoffie via CNBC
Reports have suggested that both NVIDIA and AMD are exploring Intel as a foundry option, driven by capacity constraints at TSMC and the push for manufacturing in the US. However, Yoffie argues that NVIDIA, AMD, and other customers would be hesitant to place orders for core products, mainly due to a fear of an indirect 'technology transfer' among customers, which is why a foundry spin-off becomes the most viable option here. The argument here isn't entirely wrong, but Intel Foundry has already taken steps to operate as an independent entity.
Intel's VP John Pitzer, while speaking at the UBS conference, stated that Intel Foundry is moving towards its own legal entity by having a separate advisory board, and he claimed that if CEO Tan and board members found that a spin-off would bring in value, they would move in that direction without any delay.
Yes. Listen, we're clearly taking steps to create that optionality, right? And a lot of that is being driven by engagements with external customers who would like to see more separation between the Foundry business and the rest of the company. And so we've got an advisory board today for Intel Foundry. We're moving that into its own legal entity. And so we continue to move down that path to give ourselves that optionality.
- Intel's VP John Pitzer
Fabless manufacturers do their tech security as an integral matter, which is why there is a conflict of interest for the likes of NVIDIA and others when placing their orders at Intel Foundry, but at the same time, the division does realize this, which is why they are moving in the direction of having an authoritative and independent body, to ensure that divisions don't influence each other. Intel has been a core customer of TSMC over the years, but that hasn't translated into a fear of technology transfer, despite the Taiwan giant handling orders from almost every major tech company.
It would be interesting to see how the future of Intel Foundry unfolds, now that we are heading into 18A mass production and preparing for next-gen 14A chips. These processes are known to be pivotal for the foundry's existence.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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