Dresden (DATE 2012) Trip Report: Top 10 Reasons Intel will NOT Succeed as a Foundry!

[simon_favre]

To me, the key issues are:
1) The ARM issue you described
2) The margin issue you described
3) The fact that foundry business is a service-related business. I just don't think Intel is ready to put in the effort it takes to be a good service provider.

Samsung is actually trying to be a real foundry, including the service aspect. I talked with Samsung and IBM people at the Common Platform symposium recently. IBM still positions themselves as the leading edge, "prototype" provider, if you will, and sees Samsung and GF as the volume manufacturing arm. Samsung is certainly trying, and has the muscle to back up their ambition. As you say, Intel has been there before and walked away from it before. Lest the collective memory forget, Intel at one point announced it was going into the ASIC business when LSI Logic was at its peak. LSI was actually worried ... for about 5 minutes. Intel walked away from that effort, but the methodology they developed served them well in the chipset business. Is it Deja Vu all over again?

 

[Staf_Verhaegen]

One of these is the same as a reason that they seem to be going into foundry in the first instance: one interpretation might be that the motivation is largely as a spoiler against processor competition.
The other is financial: Intel is accustomed to margins that are way beyond what is being achieved via foundry. Unless they can offer something very special that will make foundry returns look comparable to their core businesses, it seems unlikely that management will be able to justify continued "diversion" of resources to support foundry. (You describe the consequence as ADD - but I think it's more rationally based than that).

I think there is another dimension to this. The investment costs needed for next generation node fabs is increasing each time. The question is if Intel on it's own can sell enough product to earn back the investment cost of the new fab(s). I think that it is reason why they have to consider providing foundry services. I don't think it's in their culture to consider this otherwise.
I that respect it is not that import if the foundry service has the same margin as their own products but that the extra capacity needed for the foundry services allows to get a better ROI on the new fab(s) as a whole.

greets,
Staf.