Opinion: Intel is on the path to chip manufacturing exit: Page 3 of 4

July 27, 2020 //By Peter Clarke
Opinion: Intel is on the path to chip manufacturing exit
An inability to keep pace with foundries in general – and TSMC in particular – has already seen Intel drop off the leading-edge, sent it fab-lite and could eventually undermine any participation in chip manufacturing.

Not surprisingly the analysts focused on the manufacturing issue in questions. In their answers Swan and CFO George Davis re-iterated the fab-lite gospel many times. "We are also focused on maintaining an annual cadence of significant product improvements independent of our process roadmap," said Swan.

Swan asserted that the manufacturing policy is not a change but a continuation of the past, saying: "We've been designing our products and advancing our packaging technologies, so that we have much more flexibility to decide if and when we will use our fabs or somebody else's."

One analyst specifically went to the implications for capex. Swan answered: "In the event we decide that we're going to leverage third-party foundries more effectively, we would add a little more 10 [nanometer capex] and a lot less 7 [nanometer capex]."

And that cutting back on capex at the leading-edge can get addictive.

One analyst characterized Intel's fab-lite status as 20:80 with 20 percent of its manufacturing being external and 80 percent internal. Swan did not object to the characterization and indicated that over time Intel will likely be using more foundry services. "So, in general, I would say for planning purposes, we've been engaging with the ecosystem much more. And all else equal, I would expect that roughly 20 to 80 percent to be a little bit higher as we focus on growing the business," Swan said.

Next: What's lacking

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