Call it a comeback—with consequences not just for Intel but also the US government’s hopes of maintaining a lead in artificial intelligence. The troubled chipmaker’s CEO, Pat Gelsinger, announced today that Intel is relaunching and expanding its foundry business, which manufactures chip designs for other companies.
Microsoft CEO Satya Nadella also appeared at the Intel event, where he announced that his company will use Intel’s relaunched foundry to make future chips. That’s a major coup for the chipmaker as it seeks to become relevant again and compete with the world’s leading foundry, Taiwan’s TSMC, which makes chips for customers that include Apple and Google.
“We will need a reliable supply of the most advanced high-performance and high-quality semiconductors,” Nadella said. “That’s why we’re so excited to work with Intel foundry services.” He said that Microsoft’s chips will be produced using Intel’s new 18A manufacturing process, which the chipmaker said today would be available later this year. Intel says 18A will be competitive with the most advanced offerings from its leading rivals, Taiwan’s TSMC and South Korea’s Samsung.
Gelsinger disclosed that the 18A process was a culmination of two laborious years that provided advancements normally expected over a decade. He stated that Intel aspires to be the world’s second-largest foundry by 2030, with TSMC currently dominating the market.
Intel aims to utilise the recent upsurge in generative-AI to rejuvenate the company, which has slipped from its prime position in the tech industry over recent years. Intel was unable to foresee the significance of mobile computing a decade ago and also relinquished its manufacturing advantage by opting against the adoption of the foremost lithography techniques utilised for creating silicon chips.
Intel failed to emerge as a leader in the arena of chips used for machine-learning projects. Its rival Nvidia teamed up with TSMC to become the AI industry’s mainstay and witnessed a boom in business. However, Gelsinger contends that with the rapid growth of AI and the expected demand for millions of AI chips, Intel has the potential to become a major contender. He asserted during the company event in Santa Clara, California, that generative AI is “revolutionising everything about computing”. “Through our foundry, I aim to manufacture every AI chip in the industry,” he added.
The successful execution of Intel’s new strategy is crucial not only for the firm but also for the broader US tech industry and the US government’s ambitions of commanding a global lead in AI and semiconductors.
Matt Simon
Will Knight
Carlton Reid
Matt Burgess
Gina Raimondo, the US secretary of commerce, made an appearance at Intel’s event today. She likened the US government’s present efforts to rejuvenate its chip industry with the 1960s’ space race. “We have a glaring dependence on a few Asian countries for vital medical equipment, automobiles, and every piece of technology. This has prompted us to reassess the situation and ramp up chip production,” Raimondo revealed.
As part of Intel’s new foundry strategy, it will separate the new division’s financials to provide investors with a closer look into the operations of this business segment. “We’re not just revamping one organization; we’re establishing two robust, fresh entities,” Gelsinger declared.
Intel now requires more clients who are ready to place their business future in its hands. Some insiders from the chip industry voiced that the company’s restructured foundry plans have a greater chance of success compared to past efforts to revive Intel’s glory.
“Prior to Pat’s induction, there was a lack of insight into the foundry market,” says Dan Hutcheson, a seasoned chip industry analyst with Tech Insights. “But now the situation has considerably improved. Their messaging has become sharper, and they are securing clients, which is solid evidence of their doing something right.”
Gelsinger assumed the CEO role at Intel in 2021 when the company was experiencing a decline after several notable missteps. He pledged a vigorous recovery strategy that includes not only creating more competitive silicon chips but also regaining manufacturing superiority and offering that service to other companies.
According to Hutcheson, the company’s greatest advantage could be its ability to provide advanced packaging of freshly made chips into functional components, assured supply chains, and additional chipmaking solutions that customers perceive as more secure in an unstable global environment. He claims, “They appear to differentiate themselves by being a strategic alternative to TSMC.”
The falling fortunes of Intel have raised alarm within the US national security community due to the critical nature of microchips and the exceptional possibilities of AI. There are concerns that US access to the best global chips could be blocked due to China’s technological ambitions and the precarious position of the majority of TSMC’s factories in Taiwan. In 2022, the US government passed the CHIPS Act, allocating $52 billion to revitalize domestic chip manufacturing and secure silicon supply chains. According to a Bloomberg report, Intel is set to receive $10 billion of that funding.
Intel seems to believe that it can benefit from additional government funding. Today on stage, Gelsinger asked Secretary Raimondo if the US government might need a second CHIPS act. Raimondo responded, “I suspect there will need to be—whether it’s called CHIPS Two or something else—continued investment if we want to lead the world.”
