Splitting Intel’s Fabs From Its Design Business Now Doesn’t Make Sense

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Intel Nouvelles

AMD,Qualcomm,Pat Gelsinger

Patrick was ranked the #1 analyst out of 8,000 in the ARInsights Power 100 rankings and the #1 most cited analyst as ranked by Apollo Research. Patrick founded Moor Insights & Strategy based on in his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants.

Intel has been having a rough go of it, and lately it’s been “knives out” among some of its competitors who would love nothing better than to see it fail. For starters, the company’s huge capital outlay to expand its manufacturing and supply chain—especially CEO Pat Gelsinger’s ambitious “five nodes in four years” plan—hasn’t yet been matched by increased revenue. Worse, the forecast for the coming quarters isn’t as robust as you’d like to see, either.

Bloomberg put the icing on the cake when it reported that Intel is considering a host of other options AMD and Qualcomm are at the head of this list. I believe that if Intel’s new 18A process node is as strong as Intel says—and the defect density numbers do look good so far—AMD might need to adopt it. At least, that could happen if AMD can’t get the second-sourcing foundry capacity it needs from Samsung as we see TSMC continuing to raise prices.

Keep in mind that any scenarios with AMD, Qualcomm and other potential foundry customers beyond what’s already been announced are hypotheticals. Therebe a future in which Intel Foundry picks up more new and sizable customers like these, but that future would look very different from the status quo. Today, Intel Foundry mostly produces Intel’s own chips; there aren’t many other customers, at least so far.

Long story short: if Intel spins out Intel Foundry before the design business and the foundry business are both healthy,Though there are some bright spots, Intel is certainly in a serious crunch. From all accounts, it is taking what steps it can to reduce costs, including slowing its factory expansion plans and nixing projects that don’t have a clear path to profitability sooner than later.

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