Based on the Intel investor call yesterday here are some interesting comments Bob Swan made related to Intel outsourcing manufacturing and 7nm progress. Let’s start with the prepared statement:
Bob Swan: “Over the last couple of years, we have been focused on three critical priorities; improving our execution to strengthen our core business, extending our reach to accelerate the growth of the company, and continuing to thoughtfully deploy your capital.
We have and do get great benefits from internal manufacturing. We call it our IDM advantage, because it provides us attractive economics, co-optimization of design and process technology development and supply assurance. So as we engage the ecosystem more broadly, we want to preserve some of the advantages of IDM like schedule, performance and supply, as we work with our strategic partners.
Finally, I want to reiterate our intention to continue investing in leading process technology development to bring future process nodes and advanced packaging capabilities to market. This is a powerful force in creating future differentiation for our products and provides tremendous option value for our business.”
Me: Clearly Bob has been getting grief about his previous comments on outsourcing to pure-play foundries. There has also been speculation about Intel outsourcing to both TSMC and Samsung which fanned the “Intel will go fabless” flames even further.
As I previously stated in Three Things You Have Wrong About Intel: “The one thing Bob Swan will NOT do however is erase the Intel manufacturing legacy and go fabless. Nobody wants that on their semiconductor CEO resume.”
I also find zero truth in the rumor that Intel will use both TSMC and Samsung. To be successful in outsourcing and competing with AMD on a level playing field Intel needs to be exclusive with TSMC. If you outsource to both TSMC and Samsung you will be on the outside looking in, absolutely.
During the Q&A:
“Can you explain how easy it is to transition from TSMC back to your internal manufacturing? How comfortable that is? And would that be for existing type of architecture or more like chiplet type of architectures?“
Bob Swan: “Yes. It’s a good question. I mean I gave kind of the criteria around should we under what circumstances go out more of schedule predictability performance and of economics if you will the bookend on that — on those three criteria really around one, the ease of portability of our technologies to go out. And I would say, we feel very confident in the ability of us being able to port to TSMC.
And the other bookend is in the event that we go out what’s the ease in which we can port back if we conclude that’s the best alternative for either core products or chiplets. I would just say that we feel increasingly confident that yes in fact, if we conclude going out makes sense that we can. And also that in the event we want to port back in, we can as well. And that’s — those are general observations around the bookend questions.”
Me: Hopefully this is based on Bob’s semiconductor terminology naivety. If Intel does in fact “port” designs over to TSMC they will be less competitive than AMD’s direct designs to TSMC in regards to power, performance, and area. Let’s not forget what happened when Apple ported the A9 from Samsung 14nm to TSMC 16nm (ChipGate). It is progress however for Bob to acknowledge they are in fact working with TSMC.
Quick 7nm Update:
Bob Swan: “I would say since the last time we spoke, our 7-nanometer process is doing very well. I mean, last time we spoke we had identified an excursion. We had root caused it. We thought we knew the fix. Now, we’ve deployed the fix and made wonderful progress. But nonetheless, we’re still going to evaluate third-party foundry versus our foundry across those three criteria. And the call will be towards the end of this year early next year.“
Me: I know that Intel has TSMC PDKs but I have not confirmed any tape-outs as of yet. I do think that Intel will outsource price and power sensitive chips to TSMC to better compete in those markets and to reduce manufacturing expenses. Today Intel has three fabs running 10nm chips. If they do partner with TSMC Intel will only need one 7nm fab which is a very attractive CAPEX reduction (fablite versus fabless) while preserving their IDM status.