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Friday 23 October 2020

Intel CEO: Decision On Outsourcing Chipmaking ‘In The Next Couple of Months’

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Intel CEO: Decision On Outsourcing Chipmaking ‘In The Next Couple of Months’

Intel has had a rough couple of years, leading the company to consider what would have once been unthinkable: outsourcing its chipmaking.

The company has had issues with its 10nm and 7nm processes, has been struggling to keep up with demand, and has been plagued with security issues, some of which have been labeled “unfixable.”

As a result, Intel has seen its dominating lead chipped away by AMD. To make matters worse, it is losing once of its most high-profile customers, with Apple’s announcement that it will be switching the Mac to the same ARM-based chips that power the iPhone and iPad. Even Microsoft is moving ahead with plans to fully support Windows on ARM.

These problems have led the company to open the door to the possibility it might outsource chip manufacturing, something executives would never had considered during the company’s hedey.

CEO Bob Swan joined CNBC’s “Squawk Alley,” where he was asked how much of an impact the decision would have on margins.

First, as we play a larger and larger role in the success of our customers, with the investments we’ve been making, with that comes a responsibility,” Swan replied. “And that responsibility for us is to provide a predictable cadence of leadership products for our customers.”

So for us, we have a wonderful product roadmap for ’20, ’21 and ’22. And when we look into ’23, we have a decision to make, about whether to build that next generation of product on Intel’s manufacturing footprint, on third-party manufacturing footprint, or on a mix of both. And we’ve been designing our product to have the inherent flexibility to make those decisions over time.

So in the next couple of months, we’ll be looking at what’s the right decision for 2023 products, and we’ll be evaluating a series of criteria.

Schedule predictability—very important for our customers. Second, product performance—process matters, but so do a lot of other things, like software. And third, how do we retain some of the essential benefits of designing and making stuff for ourselves, in the event we take things outside with the relationships that we have with our third-party foundry partners. So we’re going through that assessment now.

If Swan’s statement is any indication, the next couple of months will have long-last impacts on Intel’s future, as well as the future of the semiconductor industry in the US.