Intel CEO Lip-Bu Tan is considering a drastic change of course for the foundry division. The new strategy would mean that the chip manufacturer would stop targeting external customers with its 18A technology and instead focus fully on the newer 14A approach.
Instead of 18A, Intel would focus all its attention on 14A, Reuters reports, citing sources. The company expects this to give it a competitive advantage over its rival, TSMC. This strategy should attract major customers such as Apple and Nvidia, which currently have their chips manufactured by TSMC.
The move stems from Tan’s analysis that 18A is struggling to attract new customers. Since taking the helm in March, he indicated in June that his predecessor Pat Gelsinger’s production process was becoming less attractive to potential customers.
Financial implications
The chip manufacturer suffered a net loss of $18.8 billion (€16 billion) last year. This was its first loss-making year since 1986. Tan is exploring several options to get out of this situation. One of these is to discontinue marketing the 18A chip manufacturing technology to new external customers.
The potential shift would mean Intel saying goodbye to billions in investments in 18A development. It would require a write-off of hundreds of millions or even billions of dollars. This is because the chipmaker has invested heavily in this technology for many years.
Existing commitments remain
Intel will honor existing commitments to Amazon and Microsoft for 18A production. These commitments make it unrealistic to wait for the development of 14A. The company will also continue to use this technology for its internal chips, including the planned Panther Lake processors for laptops scheduled to hit the market in late 2025.
Intel’s board of directors is expected to make a final decision on the future of 18A in the coming months. An initial discussion is scheduled for this month, but the complexity of the situation may mean that a final decision will not be made until the fall.