The US “Wall Street Journal” reported on July 26 that as its future CPU will use 7-nanometer chip technology that is about 12 months behind its target, Intel said that the company is considering outsourcing its manufacturing business. Bloomberg commented that this move heralds “the end of an era in which Intel and the United States dominate the world’s semiconductor industry.” The impact of this huge shock far exceeds Silicon Valley.
Intel’s dominance is not guaranteed?
Intel CEO Bob Swan mentioned in the quarterly earnings report released last Thursday night that the company expects its 7-nanometer chip products to be postponed to the end of 2022 or early 2023. Swan said that the company is considering outsourcing chip production: “As a contingency plan, we will use the productivity of other companies, without having to personally experience all procedures.” The market is generally expected that Intel is likely to outsource this business to the company. TSMC, which produced 5-nanometer-level chips in the four seasons of this year, has long been a foundry for American chip companies.
“This is a major failure on the strategic route, and it is likely to represent the end of Intel’s dominance in the computer industry.” An analyst from US investment agency Raymond James stated in a research report on the 24th that the outsourcing of cutting-edge technology, and most likely to the world’s largest custom chip supplier TSMC, means that Intel has given up for 50 years. The main competitive advantage.
Last Friday, Intel closed down 16%, making it the worst-performing stock in the S&P 500 and Dow Jones Industrial Index. Intel’s competitor AMD stock soared nearly 17%, and TSMC rose more than 9%.
The traditional strategy is full of flaws
Bloomberg reported that Intel has been the largest chip manufacturer for most of the past few decades. Many years ago, most other chip companies in the United States have closed or sold their domestic factories and changed to Asian companies producing chip products for them. Intel insists on retaining chip design and production capabilities. Intel believes that simultaneous design and production will help improve operations and create better semiconductor products. Intel’s Xeon chips can drive computers and data centers in the fields of energy, aerospace, and so on. But now this strategy is “wounded.”
Over the years, Intel has spent tens of billions of dollars to upgrade its factories, but the sudden emergence of smartphones and other mobile communication devices has completely changed the pattern of chip manufacturing. Although Intel is also involved in mobile chips, it has never fully applied its best production technology and design to this field, but continues to prioritize its existing PC and server chip business. With the rapid increase in smartphone sales, mobile phone manufacturers have used other processors from companies such as Qualcomm, or designed their own chips like Apple, and TSMC’s factories are producing such chips for them in large quantities.
In the chip field, Intel has encountered a series of bad news this year. Recently, Apple announced that it would end its dependence on Intel for nearly 15 years and switch to the use of Arm’s chip technology under SoftBank Group. At the beginning of this month, Nvidia surpassed Intel in market value and became the largest chip provider in the United States. At present, Intel is accelerating its data-centric transformation. Its second-quarter financial report shows that Intel’s data-centric revenue was US$10.2 billion, a year-on-year increase of 34%.
Chip self-sufficiency is a performance of strength
“Los Angeles Times” said that Intel is likely to outsource the business of producing chips to TSMC, but this is not easy to implement. Analysts of the US investment bank Gao Hong Group believe that TSMC’s other US customers have a competitive relationship with Intel and may oppose TSMC’s priority processing of Intel’s orders. Moreover, Intel may continue to produce chips locally in the future, and TSMC is unwilling to expand its production capacity.
At present, the global semiconductor chip industry has three main operating modes: IDM mode, fabless chip supplier mode and IP design mode. IDM model companies integrate multiple industrial chain links such as chip design, chip manufacturing, chip packaging and testing, and have extremely high requirements for capital, R&D and other strengths. Representative companies are Samsung and Intel; companies without factory chip suppliers are mainly responsible Chip design, such as MediaTek and Qualcomm; IP design mode is only responsible for designing circuits, such as ARM. In recent years, pure-play foundry companies such as TSMC, which are only responsible for chip manufacturing, have also begun to rise.
Some industry experts said that the advantage of the IDM model is that it is self-contained and does not need to rely on others. Bloomberg said that although Swann said that it does not matter where semiconductors are manufactured, local production of chips has become a national priority for China. In the eyes of some American politicians and national security experts, “sending” this expertise overseas is tantamount to a potentially dangerous mistake. At present, Huawei, a Chinese communications equipment manufacturer that has been sanctioned by the United States, intends to transform itself into an IDM manufacturer and build the ability to develop and produce chips like Samsung and Intel