Intel has decided to tap into the ASIC and design business as its next major venture, and according to the latest comments by CEO Lip-Bu Tan, the effort will play a crucial role in the firm's operations.
Intel's ASIC Business Could Turn The Firm's Foundry Into a 'Complete Package', Making it a Compelling Option For Big Tech
For those unaware, Intel had recently announced the creation of the Central Engineering Group (CEG) to consolidate all the engineering talent within the firm into a single division. And this would give "more power to the engineers" onboard. The department is headed by Srini Iyengar, who joined Intel from Cadence Systems in July. Now, while the division doesn't seem to be an integral part by the looks of it, based on what CEO Lip-Bu Tan has stated in the past, Intel's CEG group could very well be responsible for opening up an entirely new revenue frontier for the firm, and also 'make up' for the mistakes that happened with the AI hype.
In addition and just as important, the [CEG] group will spearhead the build-out of our new ASIC and design service business to deliver purpose-built silicon for a broad range of external customers. This will not only extend the reach of our core x86 IP but also leverage our design strength to deliver an array of solutions from general purpose to fixed function computing.
- Intel's CEO Lip-Bu Tan at Q3 earnings call
Okay, this all sounds a bit complex, so let's decode it a bit. If you look at Intel right now, the firm doesn't have a competitive product lineup to offer to AI customers, and the next 'big thing' is likely to be Jaguar Shores AI 'rack-scale' accelerator lineup, which is expected to debut in 2027. More importantly, both NVIDIA and AMD have created well-defined AI hardware portfolios that give Intel little room to compete; however, here's where CEG and Intel's ASIC ambitions come into play.
Intel has the silicon expertise, x86 IPs, and an internal foundry that offers manufacturing services, so customers pursuing custom AI silicon are essentially getting a 'one-stop' shop for all their needs. This is a trait that no other ASIC designer can offer in the market, not even Broadcom, Marvell, or Alchip, since Intel's foundry services are what distinguish the firm from all others. More importantly, with the CEG group, Team Blue has essentially centralized horizontal engineering, which means that the overhead in connecting design services with manufacturing + packaging has reduced dramatically.
Of course, there are plenty of opportunities to serve in the 'middle' of the AI supply chain, such as revenue generated from volume-based manufacturing margin, or even the ASIC design fees. Interestingly, Lip-Bu Tan has a deep history in the push towards a custom silicon business model, as evidenced by his position at Cadence, where he has emphasized IP business, design tools, design ecosystem partnerships, and vertical markets for custom silicon. His experience and market connections accelerate Intel's ability to capitalize on the 'ASIC hype'.
This is why we mentioned earlier that the custom silicon business could be the next 'bread and butter' for Intel if the execution is spot-on, as it would give the firm the status of having a system foundry, being responsible for every part of the supply chain. However, this isn't an easy task at all, especially given the competitiveness of the AI market and the continuous evolution of ASIC designers like Broadcom. We'll have to wait and see whether Intel manages to capitalize on this opportunity for now.
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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