Intel confirms it will continue its partnership with TSMC for the perceived future, as the brand aims to diversify its supply to meet demand. A symbiotic relationship that combines Intel’s expertise in chip design and TSMC’s excellence in leading manufacturing techniques.
During Intel’s latest earnings call, the brand’s Corporate Vice President of Investor Relations John Pitzer shed some light on the company’s ongoing chip manufacturing. When asked by Morgan Stanley analyst Joe Moore if the brand strategy remains the same as under previous CEO Pat Gelsinger, John Pitzer responded by ensuring that Intel is and will continue leveraging TSMC’s fab to bring some of its designs to reality, adding that roughly 30% of Intel wafers are outsourced today. That’s a particularly high percentage for Intel since it owns fabs itself.
Through this, Intel aims to create competition between its own foundries and TSMC to bolster innovation and return them to the leading position they had previously. Until then it can continue using world-class fabs to cover market needs.
More generally, this flies in the face of the brand’s recent plans to bring reliance on outsiders to zero as quickly as possible. Intel’s new strategy is to delegate around 15% to 20% of manufacturing capacity to external foundry suppliers.
Recent earthquakes and potential new ones aside, the issue that may arise from this partnership is a higher cost of products made by TSMC due to US tariffs which have increased the import fees for many products manufactured abroad. The US wants more chip manufacturing inside its territory to safeguard against potential conflicts that may block it from accessing this strategic resource. Security is another concern that US-based manufacturing can improve by ensuring homemade products are free of backdoors and the like.
But still, even if tariffs are not an issue, TSMC is in high demand servicing many big clients such as Apple, Nvidia, and AMD. In 2023 Apple accounted for 25% of TSMC capacity allocation, followed by Nvidia with 11%, and AMD with 7%. This means that Intel may not get as much supply as it wants in times of high demand unless it pays the price.
Intel and TSMC have been engaged in various collaborations since 2009, starting with Atom processors. While not as continuous as with other brands, Intel remained a TSMC partner especially in hard times, like when Intel faced challenges in scaling its manufacturing to newer process nodes. Until Intel’s own fabs catch TSMC’s advancements this collaboration will likely proceed.
