Intel CEO Considers Major Shift in Chip Manufacturing Strategy to Compete with TSMC

Intel Chief Executive Lip-Bu Tan is weighing a significant change to the company’s chip manufacturing strategy, potentially moving away from its current 18A process to focus on a newer 14A technology, according to two people familiar with the matter.

Credit: INTEL

The shift aims to attract major clients such as Apple and Nvidia, who currently rely on Taiwan Semiconductor Manufacturing Co (TSMC) for chip production.

Credit: INTEL

Tan, who took over as CEO in March, has been working to cut costs and revive Intel’s struggling foundry business. By June, he began expressing concerns that the 18A process, heavily backed by former CEO Pat Gelsinger, was losing appeal among potential customers.

Abandoning the 18A and its variant 18A-P for external sales could result in a write-off worth hundreds of millions, possibly billions, of USD, according to industry analysts.

Intel said its lead customer for 18A remains its own internal chip division, with plans to ramp up production of its Panther Lake laptop chips in 2025.

Tan’s proposed strategy would shift focus to the 14A process, which Intel believes could offer a competitive edge over TSMC’s N2 technology.

The board is expected to discuss the proposal as early as this month, though a final decision may not come until autumn due to the financial and strategic implications.

Intel declined to comment on the potential shift, calling it “rumour,” but stated that Tan and the executive team are committed to strengthening the company’s roadmap and financial position.

Intel posted a net loss of USD 18.8 billion in 2024, marking its first unprofitable year since 1986.

Despite the possible pivot, Intel will continue producing chips using 18A for internal use and for existing commitments to Amazon and Microsoft, which have deadlines that cannot wait for 14A development.

Tan has already begun restructuring Intel’s leadership and reducing middle management, aiming to streamline operations and improve execution.

The 18A process includes innovations such as a new energy delivery method and transistor design, which were intended to match or surpass TSMC’s capabilities. However, analysts say 18A is roughly equivalent to TSMC’s N3 technology, which entered high-volume production in 2022.

If Intel proceeds with the shift, it will direct its foundry resources, design partners and new clients toward the 14A process, where it hopes to gain a stronger foothold in the competitive chipmaking market.

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• Intel CEO Lip-Bu Tan may shift focus from 18A to 14A chipmaking process

• Move aims to attract major clients like Apple and Nvidia

• Potential write-off from abandoning 18A could reach billions

Source: REUTERS