First let me tell you that I have nothing but respect for Intel. I grew up with them in Silicon Valley and have experienced firsthand their brilliance and the many contributions they have made to the semiconductor industry. In fact, I can easily say the semiconductor ecosystem would not be what it is today without Intel.
But no company is perfect and there have been many bumps and bruises along their 50+ year journey. The following is just my Intel opinion of course but I will put my semiconductor experience against anyone else in the mainstream media without hesitation.
1. Intel will go fabless
It all started with a story leaked a while back that Intel signed a big wafer deal with TSMC. Next Intel CEO Bob Swan said on a conference call that Intel was in fact looking at outsourcing and the media’s imagination went crazy after that.
To be clear, Intel has been a happy TSMC wafer customer for many years so that was not really news. Most, if not all, of it was the result of Intel acquisitions but the point is there has been a trusted Intel/TSMC relationship in place for a long time.
Intel is a semiconductor legend and manufacturing is in their DNA. Whoever says Intel will become fabless (like AMD did) clearly does not work inside the semiconductor industry. It is NOT going to happen.
Here is my professional Intel CEO assessment but first it is important to understand the first 30 years of Intel leadership. Intel was led by some of the top technical CEOs the semiconductor industry will ever see:
Robert N. Noyce
Intel CEO, 1968-1975, Co-founder of Fairchild Semiconductor
Education: Ph.D in physics, Massachusetts Institute of Technology
Gordon E. Moore
Intel CEO, 1975-1987, Co-founder of Fairchild Semiconductor
Education: Ph.D in chemistry and physics, California Institute of Technology
Andrew S. Grove
Intel CEO, 1987-1998, previously worked at Fairchild Semiconductor
Education: Ph.D. in chemical engineering, University of California-Berkeley
Craig R. Barrett
Intel CEO, 1998-2005, Joined Intel in 1974, chairman from 2005 until 2009.
Education: Ph.D. in materials science, Stanford University
The first 30 years of Intel can best be described by Andy Grove’s famous quote “Only the Paranoid Survive” which resulted in Intel being the most dominant semiconductor company in the world. Unfortunately, the next two Intel CEOs were NOT paranoid technical leaders which brought Intel to where it is today, NOT the most dominant semiconductor company in the world.
The current CEO is not a technical leader but he is a financial one and he did not grow up Intel. There is no Intel born swagger in Bob Swan. This is Bob’s big adventure to make his CEO bones in the business world and he will do whatever it takes to be successful as defined by Wall Street, not Moore’s Law. 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.
However, I do believe Bob will outsource Intel designed products to TSMC but only for the price and power competitive markets.
Partnering with TSMC will put Intel on a level manufacturing playing field with competitors and Intel will have much higher volumes so margins will be an advantage. Intel can then better focus their internal manufacturing efforts on HPC chips for the cloud which is where the majority of profits will come from over the next 10 years.
2. Intel will take TSMC wafers from AMD
You should also know that the chances of Intel buying up ALL of the TSMC wafers at a given node so AMD can’t have any is ZERO. Yet another dumb thing non semiconductor professionals are saying. Wafer agreements are put in place well in advance of the design start much less manufacturing. TSMC builds fabs based on wafer agreements so there are no capacity surprises, just ask Apple.
To be clear, it takes Intel and AMD longer to design a chip that it does for TSMC to build a fab, do the math.
3. AMD is beating Intel
That is a matter of debate of course. The company financials state otherwise but remember Intel has not had to look in their competitive rearview mirror at AMD since the AM386 more than 30 years ago. Clearly that is no longer the case, I can assure you AMD is in Intel’s competitive cross hairs moving forward. Thus the expanded outsourcing to TSMC, that is a clear shot at AMD. AMD acquiring Xilinx is a clear shot at Intel and Nvidia acquiring Mellanox and Arm is a clear shot at both AMD and Intel.
Bottom line: Competition is the life blood of the semiconductor industry so this is all great news for the ecosystem and the rest of the world, absolutely.
Thus far Bob Swan seems to have the right amount of paranoia to pivot Intel back into a dominant position so two thumbs up for Bob.
On a side note, in 2013 I strongly suggested privately and publicly that Intel should acquire Nvidia and make Jensen Haung Intel CEO number six. That would have been one hell of a ride! Instead Intel hired Brian M. Krzanich which is probably the biggest Semiconductor CEO dumpster fire on record.