Intel Will Finalize Advanced Chip (18A) Designs By H2 2022 Says Research Firm

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Chipmaker Intel Corporation is the only alternative to the Taiwan Semiconductor Manufacturing Company (TSMC) when it comes to manufacturing high-end semiconductors believes the research firm Northland Capital Markets. After years of struggling with manufacturing the latest chips, Intel is on a path of an aggressive turnaround that includes the company opening its doors to other firms to meet their chip manufacturing needs. Northland's report comes after Intel reported its earnings results for its first fiscal quarter late last month, with the report outlining strong performance for its newly-established third-party semiconductor manufacturing division, dubbed Intel Foundry Services (IFS).

Intel Is On Track To Regain Process Leadership In $100 Billion Foundry Market Believes Northland Capital

Intel's first-quarter 2021 earnings results saw the company's revenue drop by a little over $1 billion annually, but this did not translate into an equal drop in bottom-line earnings due to a heft capital injection from investments.

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At the same time, the company added IFS to its list of business segments for the first time and revealed that the segment's revenue had grown by a heft 175% annually to contribute $283 million to the overall first-quarter revenue of $18 billion. IFS also made its way into the group of business segments that Intel calls 'Emerging Segments', with the earnings presentation sharing additional details for the unit.

These outlined that IFS revenue had stood at $103 million in the previous fiscal year's first quarter and that the strong growth was attributed to strong deliveries made to the automotive industry. This industry had been the victim of a severe semiconductor shortage last year, as the coronavirus pandemic resulted in underordering of chips, which put car markers in a tough spot as the Chinese market recovered faster than initially expected. Intel also announced that it has committed 30 test chips for its older Intel 16 manufacturing process as part of its IFS commitments.

Slide 10 from Intel's 1st quarter earnings presentation with details about IFS.

The earnings release was followed by a report from the research firm Northland Capital Market, which shared the firm's belief that Intel's position in the $100 billion foundry market is underestimated. Northland highlighted that Intel is the only alternative to TSMC when it comes to manufacturing chips on leading-edge processes. In the semiconductor industry, these processes refer to technologies that can shrink down certain dimensions of a transistor to lengths of 7-nanometers (nm) or below, and TSMC is currently on track to commercialize its 3nm process technologies.

Northland shared that with Intel's new chief executive officer Mr. Patrick Gelsinger taking charge, the company has strong leadership to executive its bold IFS strategy. It also pointed out that Intel leads the market in bringing advanced chip technologies to the crucial phase of high volume manufacturing. It also mentioned crucial details for Intel's leading-edge Intel 3 and Intel 18A chip technologies, stating that test chips built on both will have finalized their designs during the second half of this year.

As Northland stated:

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INTC has 30 test chips committed to Intel 16nm this year. INTC expects its first Intel 3 and 18A customer test chips to tape out in the second half of 2022. INTC is working with 5 target anchor customers one of which is QCOM. We also believe process technology leadership will enable INTC to regain the lost x86 market share.

Finally, on a separate note, the firm shed some light on yield problems at Samsung Foundry, the Korean chaebol Samsung Group's chipmaking arm. Northland believes that Samsung itself is shifting to TSMC for its smartphone chips and that its contacts confirm that Samsung Foundry did overstate its chip yield. The yield of a semiconductor manufacturing technology refers to the percentage of usable chips in a wafer, and reports of yield fraud first surfaced in February of this year.

Read More: Intel Vs TSMC – Chip War Has Started And Here’s Everything You Need To Know