Intel's Foundry Struggles Deepen As TSMC Rules Out Fab Acquisition
Acquiring Intel's facilities would make TSMC the world’s largest chip producer by a wide margin, potentially drawing antitrust scrutiny
Intel's Foundry Services unit is facing challenges in securing customers, raising concerns over the long-term viability of CEO Pat Gelsinger's IDM 2.0 strategy. Amid speculations of potential spinoffs or sales of its manufacturing assets, industry giant TSMC has publicly expressed a lack of interest in acquiring Intel's fabs, citing substantial financial, technological and regulatory barriers.
During TSMC's recent earnings call, CEO and Chairman C.C. Wei directly addressed speculations about TSMC potentially purchasing Intel's production facilities, stating, "Are we interested to acquire one of IDM's fabs? The answer is no, OK? No, not at all."
Intel’s fabs, primarily designed to produce its proprietary products using unique process technologies, are highly specialised. Transitioning them for third-party use would require extensive reconfiguration. For instance, while Intel’s 18A and Intel 16 process technologies are compatible with industry-standard EDA tools, its 14nm, Intel 7 (10nm ESF), Intel 4 and Intel 3 nodes are tailored for Intel’s internal products, posing compatibility challenges for external users. Retooling these fabs could incur expenses in the tens of billions, making any acquisition a costly and complex endeavor.
TSMC would also face regulatory challenges in such a scenario. Acquiring Intel's facilities would make TSMC the world’s largest chip producer by a wide margin, potentially drawing antitrust scrutiny. Moreover, the geopolitical implications of a Taiwanese company acquiring a US -based semiconductor leader would likely attract resistance from American authorities, given Intel’s symbolic importance and strategic role in the US technology sector.
Intel’s strategic IDM 2.0 initiative, introduced by CEO Pat Gelsinger in 2021, aims to establish Intel as a major player in the semiconductor foundry business, competing with TSMC and Samsung. However, Intel's current struggles to attract customers to its Foundry Services unit cast doubts on the strategy's sustainability. Despite substantial investments, Intel continues to face stiff competition from TSMC and Samsung, who lead in both market share and advanced manufacturing capabilities.
