(Bloomberg) – Intel Corp on Tuesday unveiled a grand plan to restore the glory of chip manufacturing in the past. To succeed, the new CEO, Pat Gelsinger, must follow a strategy that the old Intel has never dreamed of: to have fun playing with its competitors.
“Intel is back. The old Intel is the new Intel, ”he said. “We are going to be market leaders and we will satisfy the new foundry customers because the world needs more semiconductors and we will act in the gap in a powerful and meaningful way.”
Intel shares rose 7% on the plan. However, important parts of the strategy are a new area for a business that is used to doing everything in its own way. Intel has almost always designed and manufactured its semiconductors internally. Now Gelsinger is starting a foundry business that will manufacture chips for other companies. And he also plans to use competitors’ factories to outsource the production of more Intel components.
This will create complex new relationships. Taiwan Semiconductor Manufacturing Co. manages, for example, the world’s leading disc foundry industry. Intel is now highlighting TSMC’s lawn, while also expecting this competitor to make some of Intel’s best chips.
“TSMC will do as much for Intel as they feel they should,” said Matt Ramsay, an analyst at Cowen & Co.
Read more: Intel’s $ 20 billion foundry plan hits TSMC, Samsung
Before other chip companies commit to using Intel’s factories, it needs to fix its own manufacturing problems, the analyst added. Intel’s latest production process of 7 nanometers has been delayed and it follows several missed deadlines for the previous standard of 10 nanometers. Gelsinger said Tuesday that these issues have been resolved, but analysts are skeptical.
“We simply do not understand why customers would strongly support an Intel foundry, as Intel is so far behind in process technology and does not yet have the standard libraries needed to compete with TSMC,” said Chris Caso. an analyst at Raymond, said James.
Charles Shum, an analyst at Bloomberg Intelligence, said that large technology companies, such as Apple Inc. and Qualcomm Inc., will be reluctant to move orders to Intel because they are competing with the company to design chips.
TSMC can meet Intel’s chip manufacturing challenge: respond
Gelsinger began his career at Intel in the 1970s, setting himself up in the ranks to manage some of his largest units. He left in 2009 when Intel approached its peak using a strategy he helped implement. Intel introduced new products and new manufacturing technology with a dazzling cadence that competitors could not match, and computer and server customers built their product cycles on it. As he returns to the ‘touch’ discipline on Tuesday, Gelsinger will have to rely on the recent experience he gained as head of software maker VMware Inc. to navigate a more complex world for Intel.
Gelsinger said during a presentation with analysts on Tuesday that the way semiconductors are designed and manufactured has changed. Parts of chips can now be made in different places with different technologies, and then combined into packages. It helps designers choose and choose what best suits their needs – and it makes the old Intel model of keeping everything under one roof less relevant.
Intel showed the logos of Qualcomm and other companies that he said support the foundry. With the increasing geopolitical and trade tensions between China and the US, customers want suppliers with facilities outside Taiwan, Intel said.
Read more: The world is dangerously dependent on Taiwan for semiconductors
Gelsinger shakes it up further by doing something that his predecessors would consider sacrilege. Intel had previously been jealous of its X86 processor technology, the dominant instruction set for computer microprocessors. It will now be available as a design if customers of Intel foundries want to use it. And they can combine it with competitive approaches like those of Arm Ltd. and an open source standard called RISC-V, Intel had previously tried and failed as a foundry. This effort is different because customers will have access to Intel’s best manufacturing technology, Gelsinger said. At least two new factories are being built for the effort: “Our efforts in the past have been somewhat half-hearted,” Gelsinger said. “Customers get the best we can offer.”
Gelsinger, new CEO of Intel, can achieve improved profits, valuation: company outlook To clarify its goals internally, he has set up a separate division called Intel Foundry Services that will report its own financial performance and thus must align with the interests of customers to ensure it meets “If he is truly committed to the benefits he offers today, it will put Intel on a much more competitive level,” said Cody Acree, an analyst at Loop Capital Markets, said in an interview with Bloomberg Television. ‘You will get this honeymoon period in which Mr. Gelsinger today is, where people are looking for change, seeking optimism, anything to cling to with Intel. It is the right thing to do. But it is also quite short-lived. ”
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