Intel may Outsource 7-nm Production

26 July, 2020

The conclusion is shocking: Intel does not lead the process race anymore, and it is also does not believe in its ability to provide full scale 7 nm production services for its own road map

Above: Bob Swan, Intel CEO. “We have invested in contingency plans “

Intel took the market by surprise when it revealed last week a plan to intensify outsource production and to move some of its future 7-nanometer devices production to third parties. Immediately following the announcement, Intel’s shares in NASDAQ lost 16%. In fact, Intel published a very good Q2 2020 results: Revenues of $19.7 billion, compared to $16.6 billion last year. It also expects annual revenues of $75 billion in 2020, compared to $72 billion in 2019.

But Intel’s production difficulties overshadowed every thing else. Intel’s, CEO Bob Swan, published a prepared remarks about the issue: “We are seeing an approximate six-month shift in our 7nm-based CPU product timing relative to prior expectations. Our 7nm process is now trending approximately twelve months behind our internal target. We have identified a defect mode in our 7nm process that resulted in yield degradation.”

“Contingency Plan” means Outsourcing Production

“We’ve root-caused the issue and believe there are no fundamental roadblocks, but we have also invested in contingency plans to hedge against further schedule uncertainty.” Trey Campbell, Director of Investor Relations, gave a context during the earning call: “Our priorities in the ideal world is leadership products on our process technology. But the focus will be leadership products. So to the extent that we need to view somebody else’s process technology, and we call those contingency plans, we will be prepared to do that.”

In an answer to an analyst in the call, Swan explained that if the company decide to continue to do all its production inside, it will invest “a little more (in) 10-nanometer and less (in) 7-nanometer. In the event we decide that we’re going to leverage third-party foundries more effectively, we would have a little more 10 and a lot less seven. In the event we’re not there and there’s a better alternative, be prepared to take advantage of it.”

The conclusion is shocking: Intel does not lead the process race anymore, and it is also does not believe in its ability to provide full scale 7 nm production services for its own road map. In this case it has no other option but to outsource TSMC and Samsung, the global leaders in 7 nm process.

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Posted in: News , Semiconductors

Posted in tags: 7 nanometer , 7nm , Bob Swan , intel , semiconductors