Intel’s CEO has recently come out to speak of the possibility of outsourcing their chip manufacturing to other companies if they are in a position where they aren’t able to fabricate new generation chips themselves.

In an excerpt from an hour of conference calls as Bloomberg reports, Chief Executive Officer Bob Swan has this to say:

To the extent that we need to use somebody else’s process technology and we call those contingency plans, we will be prepared to do that. […] That gives us much more optionality and flexibility. So in the event there is a process slip, we can try something rather than make it all ourselves.

Bob Swan, Intel CEO

This is a rather shocking admission that for the first time in many years, Intel may not have the technological chops to be able to manufacture the latest and greatest anymore. Despite being ahead of the curve for the better part of 10 years against the competition, Intel is slowly losing the edge against the likes of AMD in the enterprise and user level while also not making any headroom against Qualcomm in the low-power segment of the market.

“They can’t go to TSMC because it doesn’t have the capacity,”

Sanford C. Bernstein analyst, Stacy Rasgon

Sanford C. Bernstein analyst, Stacy Rasgon, also brought up a good point within the same article: there is currently no other company in the world that has the manufacturing capacity to be able to produce Intel’s chips in large order. Both potential candidates, TSMC and Global Foundries, will most likely prioritize AMD’s design first and foremost, having been working with them for so long.

Still, this doesn’t paint the whole picture of course, as we’ll also have to look back into the history of competition from Intel’s main rival, AMD.

AMD’s chip-making spin-off has been established since 2009.

A bit of History

This isn’t the first time we’ve seen a chip company considering this option. In 2009, AMD had also gone ahead with their plan to sell and spin off their own in-house firm, Global Foundries (GF), in an effort to cut costs and maintain profitability.

For GF themselves to not lose out on the agreement, AMD also brokered an agreement to buy a certain number of wafers (the essential interconnecting layer behind all chip design) from GF regardless of how many chips AMD has managed to sell for a particular year.

It’s worth mentioning that this was the post-Athlon and pre-Ryzen era, where AMD was struggling with market sales as their FX (bulldozer) series chips just weren’t up to snuff to compete with Intel’s design.

 This partnership is still ongoing as they’ve revealed early last year that they are still continuing the partnership/agreement in due course for 2021.

The significance

Intel is now seeing the tide turn slowly against their favour when it comes to the tech advantage. With recent reports of Intel having yet another delay in the production of 10nm chips, Intel could see themselves at a 2-generation disadvantage against the competition for the near future.

The gains on the Ryzen architecture is undeniable from AMD’s part and their first 7nm, 4th generation chip is also set to come out later this year. Ryzen has almost caught up in the IPC fight against Intel’s processors and we might really see the new chips beat Intel firmly in single-threaded applications.

Perhaps this would be the year when the underdog actually becomes the favorite, who knows? We’ll only see the fruition when AMD releases the chips to the hands of reviewers sometime this year.

Via Bloomberg

Chia is the horse-author from the far flung year of 2153. While not grazing on grass pastures or reviewing old time-y games and technology from the early 21st century pretending to not know what comes next (as to not disturb the space-time continuum), he can be seen exchanging vast quantities of Earth currency for parts needed to fix his damaged space ship.