Intel hasn’t had the best summer so far. Disappointing quarterly results, steep share price declines and problematic processors have already been plaguing the chip giant. Now SoftBank also appears to have walked away from a potential deal to have semiconductors produced by Intel.
For several years, Intel has operated both as a chip designer and a chip manufacturer. Intel Foundry, an independent business unit within the company, is building a future on several continents to become a formidable competitor to TSMC. It is far from that point, but months ago a Microsoft deal to build a chip promised much good news. Now the opposite news is popping up: SoftBank has just walked away from discussions with Intel for a potentially similar deal.
Not fast enough and simply not enough
SoftBank blames Intel entirely for the botched discussions, Financial Times reports based on sources. Specifically, Intel allegedly failed to meet the Japanese company’s requirements: the final chips were said to not be produced fast enough and in too small a volume. TSMC, which makes the vast majority of advanced processors worldwide, is a logical alternative given the complaints.
The fact that Intel is losing out to TSMC in a deal such as this is not surprising. TSMC’s current production capacity in EUV machines is based on experience in production since 2015, while Intel first started using this equipment from ASML for mass production only late last year with its line of Meteor Lake laptop chips. Just to show how much experience counts in this area, chip yields at TSMC have quadrupled over the years based on EUV, a result of years of optimizations. It’s unlikely Intel is anywhere near the same level of production yields, especially given the fact SoftBank has been left unimpressed.
Although Intel is early with High-NA EUV, ASML machines of that very latest generation of lithography are not yet ready for mass production. This has meant that Intel is still stuck with production capacity that is either of an advanced age (with DUV machines, EUV’s predecessors) or has only been deployed at scale for a year. Intel Foundry is additionally expanding significantly, but many facilities have not yet been built yet. One example is the site in Magdeburg, Germany, which, due to issues surrounding the land’s suitability, has yet to be constructed.
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