Semiconductor-giant Intel (INTC 1.01%) is focused on regaining its manufacturing lead over TSMC while building out a foundry business of its own. The company is in the process of bringing five new advanced manufacturing nodes to volume production within a span of four years. That effort will culminate with the Intel 20A and Intel 18A processes, both expected to be ready by the end of 2024.
These new cutting-edge processes will be necessary for Intel to convince chip designers to use its foundry to manufacture ultra-fast, ultra-efficient chips that power smartphones and other devices. But there are other types of chips that don't benefit from the latest and greatest manufacturing process. Instead, they need a mature, inexpensive process that can deliver adequate performance and efficiency while keeping costs down.
Gaining third-party support
That's where Intel's "Intel 16" manufacturing process comes in. Intel 16 is a rejiggered version of a mature node that Intel began using back in 2018, optimized for low-cost and low-power chips. MediaTek, which designs a wide variety of chips that go into 2 billion devices each year, announced a partnership with Intel last year that aimed to bring some of those chips over to Intel's foundry using the Intel 16 process.
The Intel 16 process was expected to begin initial volume production early this year, but one missing piece of the puzzle was support for third-party chip design tools. Intel uses its own tools internally, but potential customers design their chips with third-party alternatives. A series of press releases on Tuesday from Ansys, Cadence, Siemens, and Synopsys, all leading providers of chip design tools, brings official support for these tools to the Intel 16 process.
Tools from these three companies have been officially certified for use on the Intel 16 process, so any chip designer that uses these tools can now choose Intel to manufacture their chips. While manufacturing chips on the most advanced processes may be more lucrative, mature nodes still represent an enormous opportunity for Intel.
In the first quarter of 2023, foundry market leader TSMC still generated roughly half of its revenue from chips using 16nm technology and older. Intel is attacking TSMC on two fronts: aggressively launching new advanced nodes to win over customers that need the newest manufacturing process and offering an alternative to TSMC customers who need low-cost manufacturing solutions.
Inching toward a multibillion-dollar business
The semiconductor foundry-services industry generated $130.5 billion in revenue in 2022, according to Gartner. TSMC scooped up more than half of that revenue.
While Intel's foundry business doesn't generate much in the way of external revenue right now, the company is laying the foundation to become a major player in the industry this decade. The mature Intel 16 process is now ready to go with robust third-party support, and by the end of 2024, Intel has the opportunity to regain its manufacturing edge if everything goes according to plan.
Intel is aiming to be the second largest foundry, measured by external revenue, by 2030. That would mean surpassing Samsung and approaching a 20% share of the market. If Intel succeeds, that's well over $20 billion of additional annual revenue that would be added to Intel's top line.
A lot could still go wrong. Intel has been notorious for manufacturing delays related to its own products over the years, and that legacy is certainly something that potential customers will consider. But Intel is so far on track to launch its new nodes on time, and the mature Intel 16 node offers chip designers a solid low-cost alternative to TSMC.
Check back in a few years. Intel's foundry business will likely be well on its way to claiming the No. 2 position in the industry.
Editor's note: This article has been updated. Siemens’ Calibre platform is also now certified for IFS’ Intel 16 process technology.
