Who will be Intel's first foundry customer?

Julio Franco

Posts: 8,912   +1,841
Staff member
The big picture: Intel has ambitions to create a foundry business by manufacturing chips for other companies. This is an important strategic initiative that the company will need to recoup the massive investment it is now making in fabs around the world.

Most analysts agree that this proposition is a non-starter until Intel can catch up with its manufacturing process. And rightly so, without that, Intel Foundry Services (IFS) would lack serious competitive differentiation (yes, packaging, but that is not enough). And we have also cautioned that the company lacks customer service muscles after an entire history of the fabs team running the show.

Editor's Note:
Guest author Jonathan Goldberg is the founder of D2D Advisory, a multi-functional consulting firm. Jonathan has developed growth strategies and alliances for companies in the mobile, networking, gaming, and software industries.

But beyond that there are even more concerns.

When we talk about semis fabrication, we tend to treat the different foundries nodes as fungible, as if a customer could easily trade Samsung for Intel for TSMC. This is not accurate. In reality, each fab has a different way of doing manufacturing. Intel's process was designed to make CPUs, and those processes are not the same as what is needed for other types of chips. For instance, mixed signal chips which need to process digital versions of analog signals (like cell phone signals) while also doing pure digital logic, require a very different set of steps for manufacture -- different machines, calibrated differently, in a different order. To put it politely, Intel does not have a great track record for producing their own mixed signal parts.

And then there are the tools. A major part of the foundry customer experience is the software tools used to handle communications between the fabless customer and the foundry. This is not as simple as emailing a couple files over. The big foundries have all invested heavily in integrating the tools they use to handle production with the software tools used by their customers.

This is a big part of the competitive stranglehold that the EDA vendors like Cadence and Synopsys hold over the industry. To be clear, Intel has its own set of tools to handle production of their own chips, but these are to a surprising degree proprietary to Intel. From what we hear, even Intel employees do not love the experience. Will IFS expect customers to learn these tools? More likely, Intel is going to need to invest heavily in software to build a whole new set of tools that customers will be comfortable with.

All of this leads to the question, if Intel can get its manufacturing back on track (a big if), what customer is going to want to switch to Intel? Even if Intel can overtake TSMC's process by 2025 as they claim (or is it 2026?), it is going to take fabless customers a considerable period of time (measured in years) before they are going to feel comfortable sending real production orders to IFS.

The industry is littered with horror stories about companies getting stranded because their foundry's process does not go to plan.

It is important to keep in mind that every time a company sends a chip to the foundry for production that company is taking a risk. There is a reason they call them "Risk Starts." For established foundries, that risk is measured in terms of yield, the percentage of chips produced on each wafer. But for a new process, let alone a new foundry, there is real risk that the process may not work. The industry is littered with horror stories about companies getting stranded because their foundry's process does not go to plan.

Given all this, it seems very unlikely that any of the biggest chip companies are going to be a in a big hurry to sign up for IFS. Would Apple risk an iPhone cycle failing because its foundry was not ready? Just moving from TSMC 5nm to TSMC 3nm is scary enough. If Intel can fix its process (again, a big if), the big customers will absolutely take a serious look at IFS, but that serious look will entail years of meetings and deep diligence.

That being said, there is one group of customers who might be very interested in rolling the dice on IFS -- designers of RISC V chips. Today, these companies don't have a lot of good options. They can get access to TSMC, but they are generally very small and so do not get "A Team" service or pricing.

RISC V chips also have the benefit of being a fairly greenfield opportunity, they are so new that no one has deep experience in fine-tuning foundry processes for their manufacture. Remember back in February when Intel announced they were making big RISC V investments? At the time, we noted that Intel was not going to switch its CPUs from x86 to RISC V, but they were interested in the broader ecosystem.

The investment they talked about was largely around building the tools and processes needed to attract RISC V fabless designers. It is worth pointing out that Intel's RISC V team appears to be largely sitting inside the IFS organization.

This is not a bad strategy. Under normal circumstances we would be complimenting Intel's wisdom. RISC V companies could easily be a stepping stone for IFS, a whole bunch of fairly captive guinea pigs customers upon whom they can experiment hone their customer service capabilities. The trouble is that all of this is still very far away. We recently commented to a friend that we did not expect to see IFS truly operational until 2030, and he responded "Oh, so you are an optimist."

Intel is on the right path, it is just a very long road.

Editor's note: Shortly after this column was written, Intel Foundry Services president Randhir Thakur told EE Times that the U.S. Department of Defense is IFS' "# 1 customer" as part of the DoD's SHIP program. There may be some obvious political implications in choosing Intel, but that still means Intel has yet to execute and proof itself as a foundry taking on client's projects.

Permalink to story.

 

Uncle Al

Posts: 9,279   +8,442
The industry is littered with horror stories about companies getting stranded because their foundry's process does not go to plan.

No better reason to sit WAY back in the pack and see how it develops for others ......
 

kiwigraeme

Posts: 1,297   +950
Maybe they can catch up even earlier than 2025 to TSMC- didn't take too long to catch up to AMD & Nvidias' GPUs .

What a crazy claim - yes they can have the same UV lithography equipment - but I read somewhere - making a chip is 100s of steps - each step needs to be 99.99% accurate ( something like that ) to get good yields .- ie if you had 200 steps - each step was 99% accurate -- your yield will be dreadful - do the math's basically imagine rolling a D100 - 200 times and hoping not to roll a 1.

It's the engineers , the special juice etc - buying some machines is not enough - TBF Intel already is a Fab - but not at this nm scale yet
 

umbala

Posts: 768   +1,474
I remember some years back when Intel basically refused to move onto EUV process because it was too expensive, unproven, and risky. They chose to sit it out, thinking no one else would make that kind of investment. Instead, Intel was happy to just keep adding pluses to the end of their old 14nm process with tiny increments in performance (what were they at, like 14nm+++++++?).

Unfortunately for Intel, other companies didn't sit around trying to milk their aging manufacturing process for nearly a dace like Intel was doing. Now they're scrambling to catch up, but it won't be that easy. Their new super-nerd CEO (think reverse Stephen Hawking, body works, s**t for brains) can pretend they have AMD "in the rear view mirror" all he wants, it doens't change the facts.

Now Intel wants to start selling their manufacturing capacity to others? Hilarious, and too little too late. Should've thought of that a decade ago. They will probably not find many customers (if any) because of three main things.

First, the big problem is they're behind the competition like TSMC and maybe even Samsung. All the big fish in the semiconductor segment want the absolute latest and best technology, which Intel does not currently have.

Second, Intel is a difficult company to work with since they spent decades focused inwards and also as this article points out you can't just switch from one manufacturing company to another overnight.

Third, they will probably charge too much because hey, it's Intel, so that makes it hard for anyone to actually consider them a good alternative.

PS. There's a famous story about Steve Jobs going to Intel when they first wanted switch away from IBM made chips, but couldn't hammer out a deal. Apple wanted to pay a certain price per chip, but Intel was not willing to budge. The gap between how much Apple was willing to pay and how much Intel wanted was so large that there was basically no room for negotiations, so Apple walked away.
 
Last edited:

Irata

Posts: 2,221   +3,857
Intel already had fab customers for their 10nm process - afaik LG and Ericsson.

If I remember it hurt both rather badly, so whoever signs up should make sure to get rock solid damage clauses.

Honestly, I don‘t believe it‘s Intel‘s goal to act as a contract fab, imho they are just saying it to get that sweet government money.
 

mbrowne5061

Posts: 2,057   +1,278
Editor's note: Shortly after this column was written, Intel Foundry Services president Randhir Thakur told EE Times that the U.S. Department of Defense is IFS' "# 1 customer" as part of the DoD's SHIP program. There may be some obvious political implications in choosing Intel, but that still means Intel has yet to execute and proof itself as a foundry taking on client's projects.
It also means that they have the US govt. invested in their success. And no surprise there, given that there are near-zero options for EUV and/or RISC-V manufacturing in North America (never mind the USA). Its no secret that the DoD wants a domestic supplier of current and next-gen processors, and they're likely to keep throwing money at the problem until its solved.
 

lripplinger

Posts: 377   +168
Does this article not just point to how expensive foundries are in the end? I mean, that is what I got from it. I am sure Intel has thought a lot about its foundry service. Given time, I'm sure they will get it figured out.
 

Arbie

Posts: 427   +751
Typo: you meant "founder", not "foundry". Based on Intel's last few generations. For us US taxpayers this will be node $+++++++++