Intel will possibly spin off the foundry business into an independent company: “In a move to reinvigorate its competitive edge in the chip market, Intel on Monday announced a significant restructuring plan, which saw its shares surge by 8% in extended trading. The tech giant is set to transform its foundry business into an independent unit with its own board, with the potential to raise outside capital.”
Yet, that new company will still have to deal with two things: (1) it has to provide something new TSMC, an industry-leading contracting fab company, does not have, and (2) it needs to win Nvidia, Qualcomm, AMD and other fabless chip makers as customers.
But if you look at the big picture, this particular Intel’s decision is the right call. Why? TSMC is the premier semiconductor foundry which has most of the top fabless chip companies as customers, and Intel in its current format may not be seen as a great destination for these companies, since Intel is also a design company. Indeed, you should not expect AMD and Nvidia to ship designs to Intel to fab for them, making the core essence of the current form of Intel questionable.
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But with the foundry business separated, that company can fight on its own, unconstrained by being associated with a potential competitor with its potential customers. CEO Pat Gelsinger made the right call. I expect Intel to evolve, as it focuses on designs, and with that, it will return to greatness. May the best WIN.
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