Report: Intel Could Spin Out Foundry Business or Cancel Some Expansion Plans to Control Losses

[kondamin]

Would be the dumbest move intel could make or the US could have happen.

as I wrote earlier Government should give them a a loan intel can repay when they get trough this rough patch.
As it's just a rough patch because of their expansion spurred on by the US government and the EU

 

[RandallFlagg]

I've seen this story somewhere before.....


Honestly if this happens it isn't good for anyone unless separated from Intel the foundry business flourishes. Gloflo has found their niche for sure but it's not like that has helped us much as consumers as of late. TSMC needs a competitor if not to keep prices in check to at least continue to innovate and push technology forward.

Yeah, if one can imagine an outright failure of Intel, how much would a CPU cost? The price would need to go up sufficiently to price out about 60-70% of the market, so it could easily be much higher.

$1500 for entry level cpu + motherboard inbound, and unfortunately that is likely not an exaggeration. In fact, probably wishful thinking.

 

[Darc Requiem]

I hope Intel gets their crap together. Competition is good for us all. Having one overly dominant company increases prices and stifles innovation. The dominant company always uses their position to unnaturally hold their competition down. Which keeps the status quo even when their competition produces a superior product.

 

[mkppo]

Nah motherboard vendors did, just like motherboard vendors fried 7000X3D chips

No-one really cares, Intel raised warranty

Were you living under a rock the past few months or do you have selective memory?

 

[80-watt Hamster]

When I say MBA leadership, I mean people solely focused on financial results. Same with Boeing, actually.

OT: Read an article (could have been a video essay) about the Boeing situation a li'l while back. Boeing was able to buy McDonnell-Douglas due to the value slide the profits-over-product mentality at MD (allegedly) caused. Then somehow MD leadership slid into key positions post-merger and brought that strategy with them, turning the resulting Boeing into MD 2.0. Or so the story goes.

OOT: There's a perverse incentivization from several angles to pursue the above. Investors haven't the patience they used to, and aren't likely to hold on for multiple quarters of losses. Gotta keep that stock price up. As an exec, your salary package is likely heavily composed of stock options. Gotta keep that stock price up. And since you're not really on the hook in any meaningful way if things go south, why not kill that golden goose, right?

EDIT: spelling

 

[Assimilator]

TBH I am slowly getting the feeling that Intel is too far gone for even an engineer like Gelsinger to fix.

 

[kondamin]

TBH I am slowly getting the feeling that Intel is too far gone for even an engineer like Gelsinger to fix.

Why?
even at node disadvantages they are able to produce competitive products.
The only reason they are in trouble is because they have been going in to debt because everyone wanted them to build more fabs after covid had shown how vulnerable the global supply chain is.

It still is and will be even more vulnerable if intel were to go down.

Intel's poor numbers aren't unique, everything but AI bullshit has shown poor performance in the market

 

[TechLurker]

Idly, it's worth noting that when Intel was "soft-splitting" Intel Fabs to become its own semi-independent company for reporting and business purposes, they did state that they would be willing to do business with AMD on their most advanced nodes, processes, and tech options such as Foveros, since the main goal of their fabs is to book it up, not left idle, and keeping whatever company secrets they're working with secret from the Intel design and planning side.

If they choose to hard-split the fabs in order to get more business and further reduce the risk of conflicting interests with rivals' designs, the fabs could possibly become a powerhouse if non-Intel groups are able to leverage their IP better than Intel could and come up with competitive chips on their nodes and processes. Such as AMD maybe putting Foveros to better use than Intel could, given their longer experience with chiplet designs, or Qualcomm doing similar, in theoretical examples. As well, having more companies simply booking and doing business with their fabs would be more important to Intel Fabs than just mostly doing Intel-only chips, and could help them stay in the game.

 

[kondamin]

Idly, it's worth noting that when Intel was "soft-splitting" Intel Fabs to become its own semi-independent company for reporting and business purposes, they did state that they would be willing to do business with AMD on their most advanced nodes, processes, and tech options such as Foveros, since the main goal of their fabs is to book it up, not left idle, and keeping whatever company secrets they're working with secret from the Intel design and planning side.

If they choose to hard-split the fabs in order to get more business and further reduce the risk of conflicting interests with rivals' designs, the fabs could possibly become a powerhouse if non-Intel groups are able to leverage their IP better than Intel could and come up with competitive chips on their nodes and processes. Such as AMD maybe putting Foveros to better use than Intel could, given their longer experience with chiplet designs, or Qualcomm doing similar, in theoretical examples. As well, having more companies simply booking and doing business with their fabs would be more important to Intel Fabs than just mostly doing Intel-only chips, and could help them stay in the game.

Those companies are pigeon coops that have talent float from one to the other. Just look at people like Jim Keller
they all know what they are working on already

 

[TechLurker]

Those companies are pigeon coops that have talent float from one to the other. Just look at people like Jim Keller
they all know what they are working on already

True, but the intent behind their statements was clearly that they wanted to do sincere and serious business, and that they're not going to just straight-up steal ideas from rivals just to improve their parent-company's chips. Sure everyone's basically worked for everyone and you're going to get plenty of cross-pollination in designs. But clearly they want business for the fabs, and will be willing to open up to their parent company's rivals if need be, since an idle fab is a money loser, esp. given the costs of trying to keep up with the bleeding edge and the leading edge.

 

[remixedcat]

It does. OEMs move the markets and we seen that even at times when AMD was offering the superior product, OEMs where staying fixed at Intel. Why? Because it could deliver the quantities OEMs wanted. As long as Intel is having those fabs working for them, X86 will remain the main architecture in the market, except in phones obviously. Of course Intel needs to catch up with TSMC in process nodes, because we are seeing for years now (AMD vs Intel) that architecture alone isn't enough when someone is 2-3 nodes ahead. The X86 market would have been completely different if AMD and Intel where at the same node. So, Intel needs a valid process near at TSMC's level and fabs. If they fail, OEMs will start going faster and faster to ARM solutions because X86 will have lost it's main advantage and that's Intel's capacity. When was Intel and X86 competitive to ARM in efficiency? When Intel had the advantage over TSMC and everyone else. When Intel had a clear process advantage X86 Atoms looked efficient enough compared to ARM SOCs. Intel was purring billions back then in promoting it's chips, hoping to win the tablet market. I guess they where sure they will retain that process advantage for many many years. When Intel lost the manufacturing advantage, it just abandoned any idea of fighting ARM in the tablet market. The same will happen if they sell their fabs and become just another customer of those fabs. OEMs will start looking at ARM SOCs as the best solution for them. A few steps back in performance that most people wouldn't realise, a few steps ahead in battery efficiency that most people would realise, probably cheaper platform costs.


I do want them to fix their problems. I do want Samsung to become competitive in process node with TSMC to see if AMD can become more competitive in the market, having more wafers at their disposale. I don't see SMIC doing anything in the next few years, because of US restrictions. Maybe in the next decade when they have figured out how to produce advanced equipment the way ASML does.


AMD is relying on TSMC that's why it can't win OEMs. Because it needs to wait for TSMC to serv Apple, then Nvidia, then Qualcomm and then AMD. Now it's also intel in TSMC's catalog of customers and guess what. Intel enjoys higher revenues, meaning they can also pay higher prices than AMD for TSMC's wafers. So AMD goes even further down in the priority list.

So wait the lack of oems is not nbecause if strongarming???

 

[watzupken]

Intel is paying to TSMC to improve TSMC foundries and put Intel out of business. I wouldn’t be surprised if TSMC is sabotaging to get Intel out of business. For them fabless customers are better than Intel.

My take, whatever Intel is doing now will come back to haunt them. Firstly, the messaging is very wrong when Intel chose TSMC over their own foundry to produce their CPUs. It’s never been the case. Which will surely raise questions about the quality of Intel foundry when they choose to skip it entirely. If you are looking for a cutting edge foundry, you likely won’t miss this point.
Secondly, Intel likely will make money from selling their new Arrow and Lunar Lake, but their idle fabs are going to drag them down. If they have no major take up to keep the fabs utilised, and they themselves are not using it, you can imagine it’s going to be very underused. In other words, Intel will need to pay 2 fabs, TSMC and their own fab overhead and maintenance cost. So even if Arrow and Lunar Lake are successful, Intel will still run a loss. Assuming their transfer all these cost to consumers, they risk losing more market share to competitors from ARM and AMD. So I think they kind of checkmate themselves. I don’t wish them to drop out of the competition, but I am also unsure what they are doing to turn the situation around. It won’t be a quick fix to sort out decades of mismanagement.

 

[semantics]

Nothing says short sighted make the stockholders happy like selling off hard assets to make the short term profit better looking.

 

[mechtech]

Just sell all your products at a price to maintain the exces remunerations and the $10 billion per quarter profit. If an i3 costs $500 so be it

 

[Visible Noise]

My take, whatever Intel is doing now will come back to haunt them. Firstly, the messaging is very wrong when Intel chose TSMC over their own foundry to produce their CPUs. It’s never been the case. Which will surely raise questions about the quality of Intel foundry when they choose to skip it entirely. If you are looking for a cutting edge foundry, you likely won’t miss this point.

Intel has been buying chips - including CPUs - from TSMC for decades. Until AMD completely dropped Global Foundries, Intel was a bigger TSMC customer than AMD was.

 

[Minus Infinity]

Apple will always be top-priority at TSMC. TSMC is where they are today, due to Apple money.

Nvidia don't even use TSMCs prime-nodes, even tho they can afford it. They will in 2025 tho. Blackwell - both AI and consumer - is 4nm again, just like 4000 series and Hopper. They don't need to rush to 3nm, they already dominate using a cheaper node.

The only companies to use 3nm TSMC is Apple and soon Intel.

I don't see AMD using 3nm before late 2025 / early 2026. They don't have the funds. Spent 5 billions on ZT Systems recently. They are chasing AI, trying to make a dime and moon like Nvidia stock.

RDNA5 on 3nm (or better) is the next big thing from AMD. Lets hope they can deliver 4090/5080 performane by then. They will not touch 5090 at all, even tho Nvidia gets a 1+ year headstart.

RNDA4 will be another joke. 4/5nm with mid-end focus.

Epyc Turin is on N3(E) or at least some SKU's. AMD's server orders are not peanuts for TSMC.

N3, on the other hand, is a fully new smaller node. It’s a significant advancement. The elephant in the room, of course, is how exactly Intel 3nm is going to compare to TSMC 3nm. The whole nomenclature has become kinda pointless, really, since it’s just a vaguely broad denomination.

N3B has been hugely disappointing, analysts refer to it was one of the weakest node shrinks ever. N3E is far more optimised and starts to deliver on the hype and N3P(P), N3X will be even better.

From what I've read Zen 6 desktop will be on N3E but Panther Lake will unveil 18A and we start to see Intel's 2nmm class node and advanced tile design with BSPD really starting to shine. Nova Lake which will be Zen 6's real competitor will at least be 16A or maybe 14A well in advance of N3E.

So assuming Intel's foundry can deliver going forward Intel will be the box seat against AMD relying on the much older TSMC nodes.

 

[N3utro]

Remove Pat Gelsinger before it's too late!

 

[john_]

So wait the lack of oems is not nbecause if strongarming???

It is. But it was more so 20 years ago when AMD had both better products AND fabs to make them. That's why Intel got fined for anticompetitive practices. But these lasts years where the market is much bigger than 15-20 years ago, meaning a company needs to have huge supplies of a product that is a success to cover possible demand, it's not just that. It's also about being able to supply big OEMs like Dell with all the quantities they want. Intel can still cover that demand, but AMD probably can't.

Remove Pat Gelsinger before it's too late!

It's too late to remove Pat. They will need to keep him until they are ready to announce that their new fabs and processes work. If they send Pat away now, it will be an signal that Pat's plan failed or even backfired or that their 18A and 20A processes don't work as expected.
Many probably think this already, that's why Intel's share price skyrocketed yesterday after the rumors that Intel is thinking of selling it's fabs. But I think that as long as their plan isn't derailed yet, they should keep pushing the idea of becoming a US based TSMC and keep Pat in place.

 

[noel_fs]

well they had 2 years to plan this out, they knew what they were selling

 

[trparky]

I wonder if TSMC would be interested in buying the fabs off of Intel. OK sure, they'd have to invest a shit load of money afterwards to bring them up to the fabs that they have in Taiwan but not nearly as much as having to build a new fab from the ground up.

 

[remixedcat]

I wonder if TSMC would be interested in buying the fabs off of Intel. OK sure, they'd have to invest a shit load of money afterwards to bring them up to the fabs that they have in Taiwan but not nearly as much as having to build a new fab from the ground up.

Plot twist.... amd or Nvidia buys the fabs

 

[64K]

I wonder how the money that Intel took from the CHIPS Act would affect who they could sell their fabs to? Or maybe not at all if they didn't ever take any money but were just approved for it. If they did take the billions of dollars then surely they would have to repay it on top of all the other financial mess they are in.

 

[RandallFlagg]

I wonder how the money that Intel took from the CHIPS Act would affect who they could sell their fabs to? Or maybe not at all if they didn't ever take any money but were just approved for it. If they did take the billions of dollars then surely they would have to repay it on top of all the other financial mess they are in.

I read up on the whole thing, and it's considered a low probability event. What is likely is a huge pullback on capital expenditures.

Intel spent over $24 Billion in the last 12 months on capital. That's like 2 years of revenue, which is to say it would be like giving away all its chips for free for 2 years. Even so, they still have 12 billion in cash.

 

[trparky]

Plot twist.... amd or Nvidia buys the fabs

I doubt that AMD or nVidia would buy Intel's fabs. For one, AMD spun off their fabs years ago which became Global Foundries so I highly doubt AMD would want to give having their own fabs a go again. As for nVidia, sure... they have a lot of money but running a fab is really expensive as Intel is finding out the hard way.

The only reason why TSMC got to where they are today is because everyone practically threw money their way. It's easy to spend money when it's someone else's money.

 

[Totally]

Let me get this straight.

They demanded money from the CHIPS Act for purpose of building more and updating their current foundries in the US indirectly creating more jobs which is the end goal.

Instead took that money and gave it to shareholders, fired a bunch of people, and now are looking to get rid of their foundries.

Am I missing something, shouldn't Intel leadership be on trial for fraud or was the CHIPS Act just a means for Intel to recieve a bailout without it looking like they're getting a bailout?