Intel Sees Contract Semiconductor Manufacturing as Opportunity for the Future

Intel Custom Foundry – Opportunity for Future Growth, Says Company

by Anton Shilov
02/22/2012 | 04:08 PM

Even though Intel Corp. established its Intel Custom Foundry division within its technology and manufacturing group about two years ago, the company remains extremely tight-lipped about its ongoing endeavors, future plans, prospects and clients. Officially, the company claims that it is only learning how to make chips to other companies and sees this business as a growth opportunity for the future.


“We formed Intel Custom Foundry a couple of years ago. This is a nascent program that we are taking a slow and deliberate approach to building. We believe we have world class manufacturing capabilities that have served us well over the years. Given that expertise we believe we there could be an opportunity for future growth for Intel,” said Chuck Mulloy, a spokesman for Intel.

Intel is the largest maker of semiconductors in the world that sells hundreds of millions of its own-brand chips every year. The company has leading-edge process technologies and invests more than anything else in research and development (R&D) of new manufacturing processes as well as building new manufacturing facilities. Since it every new technology node costs more than the previous one and the cost of new fabs is growing as well (and with 450mm factories their cost wil get even higher), Intel needs to constantly sell more chips and ensure full utilization of its factories.

One of the ways to guarantee maximum utilization of production facilities is to make chips for others. Unfortunately, Intel does not have experience in running foundry – contract semiconductor – business and thus at the moment the company is mostly learning what is needed to become a leader on this market.

“We also understand that running a foundry business is can be quite different than being an integrated device manufacturer (IDM). So we are taking a slow and steady approach to insure that we can serve our foundry customers while taking advantage of our world class manufacturing processes. Given this slow and steady approach it would be a stretch to say that we are trying to compete head-to-head with GlobalFoundries or TSMC,” explained Mr. Mulloy.

At present Intel officialy has two foundry customers – Achronix and Tabula – both are designers of advanced field-programmable gate arrays (FPGAs). The company claims that it does have other customers, but never names them.

“Two of our customers have announced that we are working with them, Tabula from earlier this week and Achronix in 2010. We have other agreements, but those customers have elected not to make them public,” said the spokesman for Intel.

Intel does not talk about specific capacity it can assign to its foundry partners, volumes it plans to produce or pricing. Some believe that making money is not the driving reason for Intel's foundry interests, but clearly the company is serious about making chips for others. The main question now is whether becoming a foundry is a long-term future for Intel, or a mid-term future for the chipmaker.