Intel chief executive Lip-Bu Tan is considering de-emphasising the company’s 18A manufacturing process for outside customers and instead focusing more resources on the next-generation 14A process, a shift that could involve writing off hundreds of millions or billions of dollars, Reuters reported, citing unnamed sources.
The potential plans indicate the massive risks Tan is considering as he tries to turn Intel’s business around after it failed to benefit from the growth of mobile technology and AI.
Intel is planning to use the 18A process itself for “Panther Lake” laptop chips it plans to produce in volume later this year, and remains the biggest customer for the process, according to the company.
Next-generation process
The plans Tan is considering involve Intel’s efforts to sell its manufacturing services to outside clients such as Apple and Nvidia, who currently mostly use Taiwan’s TSMC, the dominant contract chipmaker.
The plans could involve taking write-offs for the 18A and the variant 18A-P processes in order to focus on 14A, the report said.
Intel declined to comment on “hypothetical scenarios or market speculation”.
The 18A process was intended to compete against TSMC’s upcoming N2 process, but 18A has faced delays while N2 has remained on track.
In addition, some analysts have said 18A is more comparable to TSMC’s N3 process, which went into large-scale use in late 2022.
If Intel decides to focus on 14A for external customers, it could stop marketing 18A to new clients while focusing foundry employees, design partners and new clients on 14A, the report said.
Tan has reportedly told the company to draw up proposals for Intel’s board for a meeting that could take place as early as this month, although the board might not make a decision on 18A until a later meeting in the autumn.
Major shift
Intel would continue to use 18A for in-house chips already designed for the process and would also produce a relatively small volume of chips for Amazon and Microsoft using 18A as deadlines would not allow a delay while 14A is developed, the report said.
Intel last year recorded its first unprofitable year since 1986 and ousted former chief executive Pat Gelsinger, who had worked to bring Intel’s foundry business into operation.
In April Intel began a significant round of management job cuts that Tan said in a memo to staff was intended to reduce organisational complexity that had been “slowly suffocating the culture of innovation” at the company”.
