Step 2: Stay the course on IFS
Intel is on a multiyear mission to reinvent itself as a foundry service and compete with TSMC and Samsung. If there is a knock on Gelsinger, it’s that he didn’t make it abundantly clear to the board and to investors that this is a long-term project that will require time and investment before a payoff. The investment can pay off if the board and shareholders are patient, but pushing Gelsinger into retirement is not a sign of patience. And they have to be, argues Patrick Morehead, president of Moor Insights & Strategies.
“What Intel has to do is execute on the strategy that it has set out on for the last three years, and that’s to get competitive in foundry and get more competitive in products. And I think on the foundry side, what I’ve seen on the 18A process is good so far,” Morehead said.
The 18A semiconductor manufacturing technology uses a 1.8 nanometer process node. It would be well ahead of the best that TSMC can manage for the next two years, and it would give Intel a clear competitive advantage over TSMC and Samsung. “In the end, that’s what it’s all about. It’s getting 18A to the appropriate yield and defect density rates to be able to make a profitable business, not only supporting the Intel design company but also for external partners,” said Morehead.
Intel has six months to go before it hits high-volume manufacturing on 18A for internal products, and then another year before it goes into high-volume manufacturing for third parties.
Step 3: Split
Gelsinger was trying to create a foundry business as part of Intel. But Nathan Brookwood, research fellow with Insight 64, says the company needs to split itself in half and spin off the foundry business, just like AMD did in 2008. Up until 2008, AMD made its own chips. It then decided to sell off its foundries to an Abu Dhabi investment company under the name GlobalFoundries. Today, AMD is thriving, and GlobalFoundries is the third-largest fabrication company in the world, behind Samsung and TSMC.
“I’ve been talking to a few people over the last week or two, and the general belief is that the company’s too far gone to remain a single enterprise, and it’s going to have to be split” into a product company and a foundry, Brookwood said.
