Intel's foundry division is expected to witness massive changes under the new CEO Lip-Bu Tan, with one major being the decision to drop the pursuit for cutting-edge chips.
Intel's CEO Lip-Bu Tan is Expected to Take Drastic Steps to Lead the Business Back to Glory, Even If It Requires Abandoning IFS
Team Blue recently reported its Q2 earnings, and by the looks of it, things aren't going too well for Intel right now. The company is under operating losses, and despite large-scale layoffs, getting back on track will take a lot of time. It seems like CEO Tan plans to make foundational changes to Intel's business strategies, and one of the bigger hits will be taken by the foundry division, as according to the company's 10-Q filing, Team Blue won't hesitate to drop from the race of cutting-edge nodes if it doesn't see high external volume for its upcoming nodes like the 18A or the 14A.
Intel faces uncertainty about what's ahead for its foundry division, particularly for two reasons. The first one is that competition in the chip segment is so "one-sided" right now that TSMC is taking all the spotlight. Despite Intel's 18A process reporting decent progress, the markets remain committed to their partnership with the Taiwan giant, leaving Intel in uncertainty. More importantly, billions have been poured into the IFS, yet there hasn't been a breakthrough that could turn around business momentum. Here is what Intel specifically said about the future of its foundry business:
However, if we are unable to secure a significant external customer and meet important customer milestones for Intel 14A, we face the prospect that it will not be economical to develop and manufacture Intel 14A and successor leading-edge nodes on a go-forward basis. In such event, we may pause or discontinue our pursuit of Intel 14A and successor nodes and various of our manufacturing expansion projects.
We reported on Intel potentially abandoning the 18A process a few weeks ago, if it doesn't see a significant external volume with 18A, and by the looks of it, CEO Tan is ready to take dramatic decisions. For now, 18A is said to be more focused on internal products, such as Panther Lake and Clearwater Forest, while the prospects of 14A are starting to glimmer with each passing day. We could see a chip market being dominated by TSMC moving into the future, with no signs of American-born semiconductors, especially after TSMC's pivot towards the US.
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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