Intel expects to overtake TSMC in making fastest chips this year

By Thomson Reuters Feb 21, 2024 | 10:50 AM

By Stephen Nellis and Max A. Cherney

(Reuters) – Intel on Wednesday said it expected to beat a 2025 deadline to overtake its biggest rival in advanced chip manufacturing and gave new details about plans to maintain that lead versus Taiwan’s TSMC into 2026 and beyond.

Intel was set to make the disclosures at an event in San Jose, California at the first technology conference for Intel Foundry, the contract manufacturing operation that it has set up to compete with Taiwan Semiconductor Manufacturing Co.

Intel says it plans to retake the mantle of making the world’s fastest chips from TSMC later this year with what it calls Intel 18A manufacturing technology and extend that lead into 2026 with new technology called Intel 14A.

The news of 14A technology is the first time that the Silicon Valley company has given details of its plans beyond the 2025. That is the deadline that Pat Gelsinger had set to regain the chipmaking crown when he became Intel CEO three years ago.

For decades, Intel made chips only for itself and used its lead in manufacturing to create a cycle in which it made chips with industry-leading performance and charged a premium for them. Those margins, in turn, helped fund manufacturing advances. But when Intel lost its manufacturing lead, its chips became less competitive and its margins slipped, sapping the source funding for a manufacturing rebound.

Now, Intel is counting on potentially billions of dollars in U.S. government subsidies and business from outside customers to help it get back on track.

It is hoping some customers will be enticed by its long history of operating cutting-edge factories on multiple continents, especially those with concerns about TSMC’s practice of keeping its most advanced factories clustered in Taiwan.

“It’s a sales pitch that’s resonating right now. People want that,” Stu Pann, the executive overseeing Intel Foundry, said of the company’s geographic diversity.

Intel says it has four “large” customers signed up for its 18A manufacturing technology but has yet to name them.

Intel also has a special technology that analysts say will be useful for speeding up power-hungry artificial intelligence chips. Nvidia, the leader in the AI chip market, has said it is evaluating Intel’s manufacturing technology, but the two companies have not announced a deal.

Intel’s effort to lure in outside customers “is the key to the turnaround story,” said Ben Bajarin, chief executive of consulting firm Creative Strategies.

“Unfortunately, it’s an unanswered question, because this is a two- to three-year journey before we have any inkling of knowing that this is working.”

(Reporting by Stephen Nellis and Max Cherney in San Francisco; Editing by Himani Sarkar)