Intel reveals plan to dominate chip manufacturing with new wafer foundry business strategy

Gamingdeputy reported on April 3 that chip giant Intel Corporation today announced the details of its foundry business unit. As part of its financial reporting format changes, the unit is now accounted for as an independent project.

Intel and TSMC have been in competition to make high-end chips for companies including Nvidia and Apple. Intel CEO Patrick Gelsinger said today that in 2024 chip manufacturers will use advanced technologies such as artificial intelligence to optimize the latest processes to improve profit margins and chip quality.

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The core content of Intel's announcement is to use its foundry business unit to reduce the cost of its own products and increase profit margins. Intel said the foundry business will improve key areas of chip manufacturing, such as chip delivery speed and test times, to boost profit margins and win back orders from chipmakers that previously relied on third-party foundries.

The shift also prompted Intel to separate product manufacturing costs from the products portion of the income statement into a new line item called “Intel Foundry.” Intel believes this new approach and its financial statements refiled with the U.S. Securities and Exchange Commission (SEC) will allow investors to view production costs and overall product development costs separately.

The move signals Intel's determination to regain its leadership in chip manufacturing after falling behind TSMC. Intel and TSMC are competing fiercely to provide customers with the latest process technology, Gelsinger said,Customer demand for Intel's advanced 18A process technology is very strong.

According to Gamingdeputy, TSMC is currently mass-producing chips manufactured using the 3-nanometer process, and 18A is Intel’s response to TSMC’s next-generation 2-nanometer process. Gelsinger said that Intel has received order commitments from five customers and has tested more than a dozen chips for this specific manufacturing technology. He has previously stated that he has “betted” the company on the 18A process. In order to defeat TSMC, Gelsinger emphasized that the first 18A test chip will be produced this year.

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Gelsinger added that the new business model will establish a link between foundry investments and product units to set a fair market wafer price for Intel products. Intel's plan to rapidly iterate its process technology is also part of its effort to regain its technology leadership. The company will rapidly launch five new process technologies within four years.

After several years of turmoil in the chip market and soaring costs, Intel management is optimistic about the prospects for its foundry business in 2024. they believe,By 2030, Intel wafer foundry will become the second largest foundry company in the worldand will benefit from the profit margin improvement brought by extreme ultraviolet (EUV) lithography technology.

The total contract value currently signed by Intel's foundry business is US$15 billion. The new cost structure and the advantages of EUV technology will help Intel maintain the operating profit margin of the product division at 40% within ten years.

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