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Intel will Split the Chip Manufacturing Business, But Why?



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The report pointed out that Intel may be forced to split its chip manufacturing business due to obstacles in its own chip manufacturing process research and development. Why does Intel have to do this?

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AMD has been under the pressure of Intel for several years

In 2007, Intel launched the tick-tock tactic, which is to upgrade the chip architecture and chip process every two years. Due to the exponential growth of capital investment in advanced chip manufacturing processes, Intel's own financial strength can maintain such a pace and continue to gain a leading edge over AMD.

In contrast, AMD, which has relatively weak financial strength, simply cannot keep up with Intel's footsteps. The capital investment based on chip architecture R&D and chip manufacturing process R&D was in a dilemma. In desperation, the chip manufacturing business was split and sold to ATIC of United Arab Emirates, and the Global Foundry chip manufacturing plant was established in 2009. At that time, AMD also held some shares of GlobalFoundries to obtain a fund to ensure the research and development of chip designs.

In contrast, AMD, which has relatively weak financial strength, simply cannot keep up with Intel's footsteps. The capital investment based on chip architecture research and development and chip manufacturing process research and development was in a dilemma. In desperation, the chip manufacturing business was split and sold to ATIC of United Arab Emirates, and the Global Foundry chip manufacturing plant was established in 2009. At that time, AMD also held some shares of GlobalFoundries to obtain a fund to ensure the research and development of chip designs.

Fortunately, after nearly eight years of hardship and hardship, AMD developed the Zen architecture in 2016. At this time, the chip foundry TSMC’s chip manufacturing process research and development gradually kept up with Intel’s footsteps. AMD’s powerful Zen architecture plus TSMC’s advanced Process process, AMD's share in the PC processor market began to rise steadily.

Intel chip manufacturering business

Intel is gradually facing difficulties

When AMD ushered in a new life, Intel itself began to get into trouble. After Intel's chip manufacturing process was put into production in 2014 with the 14nm FinFET process, it has stalled in terms of chip process research and development. It is precisely because Intel did not put the 10nm process into production until 2020, so it gradually lags behind in chip manufacturing process.

In the same time period, TSMC's chip manufacturing process is progressing smoothly. From 2015, the 16nm FinFET process steadily surpassed the 10nm, 7nm, 7nmEUV, and 5nm processes, maintaining the pace of upgrading the process once every 1-2 years, and gradually achieved the leading advantage over Intel.

Intel has stagnated in the research and development of chip technology, and there are few breakthroughs in the research and development of chip architecture. Intel’s new chip architecture has limited performance improvements, and now facing AMD’s Zen architecture, it can only be suppressed. This has also led to Intel's continued shrinking of the PC processor market. Now Intel and AMD have very close in the PC processor market.

However, Intel no longer seems to value the PC processor business, and it has shifted its focus to the server chip business. Server chip business has become the main source of profit for Intel, and it relies on server chip business to occupy advantages and obtain development space in the future Internet of things, autopilot and other emerging fields.

Splitting the chip manufacturing business may be an inevitable choice

Intel hopes to find a bright future relying on the server chip business, but the backward chip manufacturing process has gradually become a disadvantage for it to continue to dominate the server chip market.

After AMD's success in the PC processor market, AMD began to seek the server chip market, relying on the powerful Zen architecture, coupled with the support of TSMC's advanced technology process, launched the EYPC server chip. Since Intel's server chips have been criticized for being too expensive for more than a decade, server vendors and Internet companies have been interested in introducing new competitors. Now that AMD’s server chips have powerful performance and price advantages, these customers are willing to cooperate with AMD.

In the face of AMD’s invasion, Intel should avoid AMD’s rapid invasion of the server chip market. It would be appropriate to choose to hand over server chips to TSMC and other chip foundries for production. As a result, it does not make much sense for it to continue to have chip manufacturing business. Perhaps with this in mind, there was news in the media that Intel would sell its chip manufacturing business.

Intel has previously handed over some of its chips to TSMC’s foundry production. If Intel splits its chip manufacturing business, it will inevitably hand over more chips to TSMC’s foundry production in the future, but now TSMC’s advanced processes are given priority to serve Apple. If Intel invests in the arms of TSMC, it is bound to compete with Apple.

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