Intel Chief Executive Officer Lip-Bu Tan wants to change the company's approach to contract manufacturing to win over large customers, including by stopping selling to outside customers certain chip manufacturing technologies that Intel developed internally, Reuters reported.
Since Tan took over the company in March, he has been aggressively pursuing cost-cutting measures, and this time his sights have been set on a manufacturing process known as 18A. Intel's previous CEO, Pat Gelsinger, had heavily invested in the process, investing billions of dollars in its development, but it has recently lost traction with new customers.
In terms of investment, $200 billion has been invested in manufacturing capacity and research and development in the US since 2016. While these are combined figures for new factory construction, the company separately reported $16.5 billion in R&D investment.
To stop external sales of the 18A and 18A-P manufacturing processes, the company would have to write off costs that industry analysts say could cost hundreds of millions or even billions of dollars. At the same time, Intel says it is a major customer for 18A and intends to increase production of its Panther Lake chips in the second half of 2025.
The main problem with the 18A process is that its implementation has been repeatedly delayed, allowing TSMC to gain market share with its own N2 technology. Tan wants to fix that by focusing entirely on the next 14A process, which could help Intel catch up with TSMC. In this way, Tan wants to attract customers like Apple and NVIDIA, which are currently turning to the Taiwanese manufacturer.
According to people familiar with the matter, Tang will propose to stop offering 18A to new customers at the next board meeting. One of the biggest problems with this proposal could be that Intel won’t be able to implement the 14A manufacturing process quickly enough to meet customer demand.
Whatever the board's decision, Intel will definitely continue to produce chips using the 18A process for customers where plans are already in place. The company will also use 18A for Amazon and Microsoft, as deadlines make it impossible to set up production using the 14A process.