According to semiconductor analyst Andrew Lu, Intel is rumored to invest $4 billion in TSMC in 2024 for the fabrication of 3nm CPU tiles. The report suggests that in 2025, TSMC will produce a substantial amount of Intel’s chips. Orders will go as high as $10 billion. Intel’s Lunar Lake processor is said to be the first to have its CPU cores manufactured externally. This has led to speculation about Intel’s growing reliance on TSMC in the future.
Intel to Use TSMC’s 3nm Node
TSMC has a new technology called the 3nm node. This is what makes the latest Apple M3 and A17 processors work. But now, an analyst says that Intel will start using this technology too. Right now, Apple is the biggest customer for TSMC’s 3nm. However, Intel might become the second biggest, pushing AMD to third place. The analyst predicts that by the end of 2024, Intel will get 15,000 3nm wafers every month from TSMC. And in 2025, this number will go up to 30,000.
The numbers might seem a bit confusing when you look at the order values. In 2024, getting 15,000 wafers per month is said to be worth $14 billion, but in 2025, having double the wafers will only cost you $10 billion. This could be because the cost of 3nm wafers is going to decrease over time. As technology matures, the production process gets better, and the company can make more units with fewer issues. This usually leads to lower prices for the wafers. So, even though Intel is ordering more wafers in 2025, the overall cost might be less because of the expected decrease in prices for 3nm wafers.
Lu believes that Intel has made up its mind to heavily rely on TSMC’s foundries in the future, suggesting that there’s no turning back for the company. Working with TSMC offers Intel various financial and economic benefits. This will lead to the company’s production capacity increasing, which is a clear advantage. Intel has significant production capabilities. However, they may not be extensive enough to handle the production needs for their CPUs, GPUs, and third-party manufacturing. This is why Intel has been outsourcing less critical parts of its production to external foundries for several years.
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Intel has Already Worked with TSMC in the Past 
Intel’s growing dependence on TSMC is not a recent development. The Arc Alchemist GPUs are already under manufacturing at TSMC, and the Ponte Vecchio chips also come from TSMC. For three out of the four tiles in Meteor Lake, Intel is using TSMC’s 5nm and 6nm nodes. There are speculations that TSMC will also produce the upcoming Battlemage and Celestial GPUs. The future tile CPUs are likely to keep using TSMC-manufactured tiles, at least in part. This indicates a continued and expanding partnership between Intel and TSMC for their manufacturing needs.
For many years, Intel has been outsourcing some of its production to external foundries, and overall, the advantages seem to be greater than the drawbacks. Also, Intel is now in a more favorable technological position compared to the challenges it faced when trying to produce 10nm chips. Looking back, if Intel had chosen to manufacture its CPUs at TSMC during that period, it might have avoided losing as much market share to AMD in recent years. This suggests that strategic decisions regarding production partnerships could have played a role in Intel’s market performance against competitors like AMD.
Conclusion
Intel is reportedly investing heavily in TSMC for the fabrication of 3nm CPU tiles. this will make a significant shift in the company’s manufacturing strategy. This move is driven by the challenges of producing at the 3nm node and the advantages of outsourcing to a foundry like TSMC.
