Intel CEO Bob Swan admitted the unthinkable this week, saying his company could outsource chip production to remain competitive with its smaller, more innovative rivals.
The admission came during Intel’s post-earnings conference call. Intel, which had just delayed the introduction of the 10 nanometer (nm) chipsets for five years, admitted earlier in the day that its next-generation 7nm designs were also behind schedule and would face at least a year. more than delays. Meanwhile, Intel’s competitors are already submitting more efficient designs. AMD moved to 7nm chips this year, and Qualcomm moved to even smaller 5nm designs.
“We have invested in contingency plans to guard against further uncertainty in the schedule,” Swan said in response to a question about Intel’s inability to ship 7nm chips on time and whether the company would consider outsourcing. “As we need to use someone else’s process technology and call those contingency plans, we will be prepared to do so. And if we do, there are many moving parts. “
Even the admission that Intel is ready to outsource chip production is a huge success for the reputation of a company that has apparently led this market for more than 30 years. Like Microsoft in software, Intel was the hardware that fueled the PC revolution, and its chips are still popular in PCs and data centers today. But these markets are moving inexorably toward more energy-efficient designs like those of ARM and its licensees. And that could leave Intel out in the cold.
Quoted in Bloomberg, analyst Chris Caso described the admission as “a surprising failure [that] it could well represent the end of Intel’s computing domain. “
“With the latest push from process technology, we believe Intel has zero or no chance of catching or exceeding TSMC for at least the next half decade, if not ever,” added analyst Chris Rolland, referring to an installation of Taiwanese manufacturing. . TSMC already produces more than a billion chipsets every year, far more than Intel.
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