It's official: Intel will continue outsourcing up to 30% of its wafer production to TSMC

[hist78]

"Q - Joe Moore (Semiconductor Industry Analyst at Morgan Stanley)

So, you went through a CEO transition, lots of transformational stories coming out every day. But it seems like from the way you're talking about on the earnings call and the meetings you've been doing, strategy is still basically the same. And so maybe give us some perspective on what's happening at Intel now from more of a strategic perspective? It seems like you're still aiming towards the same general goals that you had under, Pat?

John Pitzer (Corporate Vice President, Investor Relations at Intel Corporation)

Yes. I mean, it's a good question. I think the core of the strategy continues to be standing up a world-class fabless company and a world-class foundry. I think on the margin, as you think about Dave and Michelle in the interim CEO roles, they have been given full agency to go off and prosecute the strategy, I think on the margin. I think from an Intel products perspective, I think there's a strong understanding that without that being healthy first. It's really hard to have a healthy Intel foundry.

So, I do think Michelle has been given a bit more agency to go off and make decisions around what she thinks is best for the product road map and for longer-term market share there. And I think the biggest sort of manifestation of that today is she probably has more agency to use TSMC longer and for more than she might have had six or nine months ago. And to be clear, we have roughly 30% of our wafers outsourced today. That is probably a high watermark for us.

But to the extent that I think a year ago, we were talking about trying to get that to zero as quickly as possible. That's no longer the strategy. We think it's always good to have at least some of our wafers with TSMC. They're a great supplier. It creates a good competition between them and Intel Foundry. Not quite sure what the right sort of level set is. Is it 20? Is it 15? We're working through that. But we will use, I think, external foundry suppliers longer kind of under this new strategy."


Source:

Morgan Stanley Technology, Media & Telecom Conference:

Morgan Stanley Technology, Media & Telecom Conference

www.intc.com

Audio and transcript:

Intel Corporation (INTC) Morgan Stanley Technology, Media & Telecom Conference (Transcript)

Intel Corporation (NASDAQ:INTC) Morgan Stanley Technology, Media & Telecom Conference March 5, 2025 4:50 PM ETCompany ParticipantsJohn Pitzer -...

seekingalpha.com

 

[hist78]

"Q - Joe Moore (Semiconductor Industry Analyst at Morgan Stanley)

So, you went through a CEO transition, lots of transformational stories coming out every day. But it seems like from the way you're talking about on the earnings call and the meetings you've been doing, strategy is still basically the same. And so maybe give us some perspective on what's happening at Intel now from more of a strategic perspective? It seems like you're still aiming towards the same general goals that you had under, Pat?

John Pitzer (Corporate Vice President, Investor Relations at Intel Corporation)

Yes. I mean, it's a good question. I think the core of the strategy continues to be standing up a world-class fabless company and a world-class foundry. I think on the margin, as you think about Dave and Michelle in the interim CEO roles, they have been given full agency to go off and prosecute the strategy, I think on the margin. I think from an Intel products perspective, I think there's a strong understanding that without that being healthy first. It's really hard to have a healthy Intel foundry.

So, I do think Michelle has been given a bit more agency to go off and make decisions around what she thinks is best for the product road map and for longer-term market share there. And I think the biggest sort of manifestation of that today is she probably has more agency to use TSMC longer and for more than she might have had six or nine months ago. And to be clear, we have roughly 30% of our wafers outsourced today. That is probably a high watermark for us.

But to the extent that I think a year ago, we were talking about trying to get that to zero as quickly as possible. That's no longer the strategy. We think it's always good to have at least some of our wafers with TSMC. They're a great supplier. It creates a good competition between them and Intel Foundry. Not quite sure what the right sort of level set is. Is it 20? Is it 15? We're working through that. But we will use, I think, external foundry suppliers longer kind of under this new strategy."


Source:

Morgan Stanley Technology, Media & Telecom Conference:

Morgan Stanley Technology, Media & Telecom Conference

www.intc.com

Audio and transcript:

Intel Corporation (INTC) Morgan Stanley Technology, Media & Telecom Conference (Transcript)

Intel Corporation (NASDAQ:INTC) Morgan Stanley Technology, Media & Telecom Conference March 5, 2025 4:50 PM ETCompany ParticipantsJohn Pitzer -...

seekingalpha.com

Many of us have been saying that Intel generates most of its revenue and profit from products, not from Intel foundry services. Intel urgently needs to offer competitive products to turn the company around. It should rely on whoever can manufacture the products the market demands, even if that means working with TSMC.

Finally, the current Intel leadership has recognized this and adjusted its strategy accordingly.

 

[siliconbruh999]

Many of us have been saying that Intel generates most of its revenue and profit from products, not from Intel foundry services. Intel urgently needs to offer competitive products to turn the company around. It should rely on whoever can manufacture the products the market demands, even if that means working with TSMC.

Finally, the current Intel leadership has recognized this and adjusted its strategy accordingly.

They should continue investing in fab as well it was Intel fabs that carried products their design are subpar in PPA be it GPU/CPU their design needs more work as well.
They also have a completive process in their own fab they can use anyway for the next 4 years the roadmap is set.

 

[hist78]

They should continue investing in fab as well it was Intel fabs that carried products their design are subpar in PPA be it GPU/CPU their design needs more work as well.
They also have a completive process in their own fab they can use anyway for the next 4 years the roadmap is set.

No doubt Intel will continue investing in Intel Foundry. However, the urgent issue is Intel's lack of products in high-demand areas, which has been causing its deteriorating financial situation.

Intel's new strategy is to improve the profitability and product offerings of the Intel Product Division first. As John Pitzer said: "I think from an Intel products perspective, there's a strong understanding that, without that being healthy first, it's really hard to have a healthy Intel Foundry."

Once the profit of the Intel Product Division improves by leveraging TSMC's capabilities and capacity, the Intel Product Division can then afford to pay more to its counterparts at Intel Foundry.

Considering that Intel generates the majority of its revenue and profits from products, not from foundry services, and has limited resources to inject more into Intel Foundry, this approach is very practical and has a chance of success.

On the other hand, the majority of Intel Foundry's capacity is utilized by the Intel Product Division. A strong and profitable Intel Product Division is critical for the Intel Foundry and currently more important than external customers.

This means TSMC will remain an important partner for Intel for many years to come. Intel and TSMC are returning to the cordial relationship that has existed for the past 30+ years.