On April 26, chip giant Intel (NASDAQ:INTC) admitted that its highly troubled 10nm chip manufacturing technology wouldn't go into volume production in the second half of 2018 as the company had said back in January, but would instead go into mass production sometime in 2019 (Intel wouldn't even commit to production in the first half of 2019, either).
With this delay, Intel has fallen solidly behind its largest peer, Taiwan Semiconductor Manufacturing Company (NYSE:TSM), which began mass production of chips using its 7nm technology (roughly equivalent to Intel's 10nm technology) earlier this month.
Although there is some hope that Intel might be able to pull it together and, at a minimum, return to parity with TSMC, the reality is that this is unlikely to happen. Indeed, it seems almost obvious at this point that Intel will fall further behind TSMC.
Look at the timelines
If all goes as planned -- something that, frankly, shouldn't be taken as a given at this point -- Intel should go into mass production on chips using its 10nm technology in either the first half of second half of 2019. Intel is seemingly about a year behind TSMC as of today.
The first variant of Intel's 10nm technology that will go into mass production is likely to be its second-generation variant, known as 10nm+. These products will be based on the company's Ice Lake chip architecture. The Ice Lake chips are expected to be followed by a processor family known as Tiger Lake, which will be manufactured using the company's third-generation 10nm technology, known as 10nm++.
In the best case, Intel brings 10nm+ into volume production in the first half of 2019, and then it rolls out the follow-on 10nm++ technology into production a year later in the first half of 2020. If the development of its 7nm technology goes extremely smoothly (something I'd have a hard time betting real money on), then Intel could roll out the first 7nm products near the end of 2020. More realistically, though, Intel would probably target its first 7nm product launch for the first half of 2021.
If things don't go well for Intel, then we could see the first 10nm+ products in the second half of 2019, with the 10nm++ products coming in the second half of 2020. Such a schedule would likely mean the first 7nm products wouldn't arrive until the second half of 2021, or potentially even early 2022.
By contrast, TSMC says it intends to go into mass production on its 5nm technology (roughly equivalent to Intel's 7nm technology) in the second half of 2020. Indeed, since Apple (NASDAQ:AAPL) is almost certainly going to use TSMC's 5nm tech for its A14 applications processor that'll launch in the second half of 2020, TSMC will need to be cranking these chips out by no later than June of 2020.
In the best case, Intel will be slightly behind TSMC during what Intel calls the 7nm generation, and what TSMC calls the 5nm generation, and in a less-ideal scenario (let alone a worst-case scenario), Intel will be substantially behind.
The implications are significant: Since TSMC manufactures chips for everybody -- including Intel's competitors -- Intel's competition could have a significant chip manufacturing advantage over Intel, allowing them to beat Intel in the marketplace with better, more efficient products.
This is a significant failure on the part of Intel's manufacturing organization that will require some serious changes to course-correct over the long term.