There is surely also a commercial angle to this as well as the technical and organisational one.
Intel's CFO David Zinsner has some interesting things to say on this at a recent analyst conference.
From what he is saying (let's assume that 18A is technically competitive), Intel themselves do not expect to be cost competitive with TSMC on 18A until they can approach TSMC's scale. Even then, there's a "cost differential in terms of geography" and some unspecified other factors weighing against Intel ("like scale and all those kind of things").
On the one hand, he's saying that the raw 18A process is cost competitive with TSMC. On the other, he's clearly saying that the cost of die delivered to customers will clearly either be higher or margins must be lower.
Has he made a convincing case that Intel can make enough money at this business, even if the technical, cultural and organisational issues can all be solved ?
Extracted from this:
Intel Corporation (NASDAQ:NASDAQ:INTC) TD Cowen's 51st Annual Technology, Media & Telecom Conference March 31, 2023 10:15 AM ETCompany ParticipantsDavid Zinsner - CFOConference Call...
seekingalpha.com
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David Zinsner
Yeah. So I think as you pointed out, the 5 nodes in four years is going extremely well. Intel 7 is done Intel 4 for all intents and purposes, we can call a victory on Meteor Lake will be in that node. It's an EUV node. So I think we've proven that we can deliver on EUV performance. Intel 3 will come with Sierra Forest.
So in the first half of '24, we'll be able to show progress there as well. 20A will be a little bit more difficult to assess. But I would say right now, we are engaging with customers on the foundry side on 18A and the no better third-party validation of our process technology like an external customer that's got to put their products at risk to accept 18A wafers from us.
And so our hope is that by the end of the year, we'll be able to announce 18A customer that I think will validate 18A's performance and our ability to achieve that in the -- under the 5 node, four year calendar. The cost on 18A, just if you look at it kind of strip out like scale and all those kind of things, it's going to be extremely cost competitive with the other players in the marketplace.
Of course, there is a scale disparity. There is a cost differential in terms of geography. So when you look at it on a fully blended basis, it's not -- we're not suggesting that we would get the same level of margins as the largest player in the marketplace. But we do think just in terms of what we can -- in terms of delivering on the transistor technology in terms of delivering on what we call -- what Bradley (ph) has talked about is gate all around. We think that we will have a very competitive product offering on 18A."
