Will Intel CPUs Move to TSMC? Largest Expansion Planned This Year

[Image source=AP Yonhap News]

[Asia Economy Reporter Changhwan Lee] As Intel considers outsourcing some of its central processing unit (CPU) manufacturing, Taiwan's TSMC is emerging as a leading foundry candidate. Due to the influx of orders, TSMC has announced that it is even considering the largest scale of facility expansion this year.

On the 16th, market research firm TrendForce predicted that Intel plans to entrust some CPU production to TSMC. The company stated that from the second half of this year, TSMC plans to mass-produce Intel's Core i3 CPUs using its 5-nanometer process. It added that from the second half of next year, it plans to mass-produce Intel's mid-to-high-end CPUs using its 3-nanometer process.

Intel, which has been producing CPUs in-house, has recently faced difficulties due to delays in transitioning to finer processes. In October last year, Intel announced, "By the end of January 2021, we will decide whether to expand our own 7-nanometer production capacity or outsource production through foundry companies." At the end of last year, a U.S. activist fund urged Intel to seek strategic alternatives, claiming that Intel had fallen behind Samsung and TSMC.

Following repeated criticisms of being outpaced by competitors, Intel recently dismissed CEO Bob Swan and appointed Pat Gelsinger from VMware as the new CEO.

Industry insiders believe that Intel is considering entrusting the production of core semiconductor chips to Taiwan's TSMC or South Korea's Samsung Electronics. Bloomberg News predicted that Intel will soon make a final decision and announce it. Intel is scheduled to release its fourth-quarter results on the 21st, and it is expected that foundry-related information will also be disclosed on that day.

However, Bloomberg also analyzed that currently, TSMC is more likely than Samsung Electronics to receive orders from Intel. TSMC has already been outsourcing Intel's non-CPU products and has built cooperative references, whereas Samsung competes with Intel in some products, raising concerns about technology leakage.

TrendForce expects that by outsourcing CPU production, Intel will reduce costs and continue to produce high-margin advanced chips in-house, maintaining profitability. It also anticipates that Intel will increase research and development (R&D) investment with the saved costs.

Meanwhile, TSMC announced its fourth-quarter results on the 14th and stated that it will increase capital expenditures to as much as $28 billion this year. This is a significant increase from last year's $17.2 billion. This year's capital investment includes expansion in the United States. Industry analysts are interpreting this as linked to U.S. factory expansion and additional orders from Intel. However, TSMC reportedly did not make any additional remarks related to Intel during this earnings announcement.