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Under new CEO Lip-Bu Tan, Intel’s foundry division is expected to undergo significant changes. One major change will be the decision to drop the pursuit of cutting-edge chips if it doesn’t see high external customer interest.
Intel’s CEO Lip-Bu Tan is Expected to Take Drastic Steps to Lead the Business Back to Glory, Even If It Requires Abandoning IFS
Team Blue recently reported its Q2 earnings, indicating that things are not going well for Intel. The company is under operating losses despite large-scale layoffs. CEO Tan plans foundational changes to Intel’s business strategies, with one major hit being the foundry division. According to Intel’s 10-Q filing, Team Blue won’t hesitate to drop from the race of cutting-edge nodes like 18A or 14A if it doesn’t see significant external volume.
Intel faces uncertainty about its foundry division for two main reasons. First, the chip market is dominated by TSMC, which has taken all the spotlight. Despite Intel’s progress with the 18A process, markets remain committed to TSMC, leaving Intel in doubt. More importantly, billions have been invested in Intel Foundry Services (IFS), but no breakthroughs have occurred that could reverse business momentum. Here is what Intel specifically said about its foundry business:
However, if we are unable to secure a significant external customer and meet important customer milestones for Intel 14A, we face the prospect that it will not be economical to develop and manufacture Intel 14A and successor leading-edge nodes on a go-forward basis. In such event, we may pause or discontinue our pursuit of Intel 14A and successor nodes and various of our manufacturing expansion projects.
We previously reported that Intel might abandon the 18A process if it doesn’t see significant external volume with 18A. CEO Tan is ready to make dramatic decisions. For now, 18A is more focused on internal products like Panther Lake and Clearwater Forest, while the prospects of 14A are starting to look promising. The future may see a chip market dominated by TSMC with no signs of American semiconductors, especially after TSMC’s pivot towards the US.
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📚 Reading Comprehension Quiz
According to the passage, what major change is expected in Intel's foundry division under the new CEO Lip-Bu Tan?
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