DigiTimes reported on Wednesday that Nvidia is planning to tap Intel's (INTC 0.25%) foundry for some manufacturing and advanced packaging needs beginning in 2028. Nothing has been confirmed, so this remains in the realm of rumors and speculation. However, it does line up with comments made by Intel management during the fourth-quarter earnings call.
If this Nvidia rumor is true, Intel's foundry business will get a significant boost from the king of AI chips.
Image source: Intel.
A mix of wafers and packaging
DigiTimes reports that Nvidia is eyeing Intel Foundry for its Feynman generation of GPUs, which is set to debut in 2028. Given supply constraints at foundry leader TSMC, it would certainly make sense for Nvidia to seek alternative manufacturers.
According to the report, Intel won't be manufacturing the GPU compute die. That highly complex part of the chip will stay with TSMC. The plan is for Nvidia to use the Intel 18A process, or potentially the upcoming Intel 14A process, for portions of the I/O die. The report notes that this is all contingent on yield improvements for these processes.
The I/O die contains memory controllers and handles inter-chip connectivity. It's not as performance-critical as the GPU compute die, but it still requires an advanced process. Intel will reportedly also handle a portion of the advanced packaging needs for the Feynman family of GPUs. Intel's EMIB technology will be used for up to 25% of chips, with TSMC used for the rest.
For Nvidia, there's a strong incentive to reduce its reliance on TSMC while shifting some production to the U.S. This deal, if it's more than just a rumor, could act as a test run for Nvidia as it considers moving more manufacturing business to Intel down the road.
Intel's advanced packaging opportunity
During Intel's fourth-quarter earnings call, CFO David Zinsner gave a surprising assessment of Intel's advanced packaging opportunity. Zinsner said he had previously expected individual advanced packaging deals to be worth no more than a few hundred million dollars. That's no longer the case. "I'd say some of the early customer engagements suggest that we'll be well north of $1 billion on many of these opportunities for advanced packaging. So they're way more exciting than even I had expected," Zinsner said.
That lines up with the Nvidia rumor. If Nvidia does end up using Intel for a quarter of its advanced packaging needs in 2028, it would almost certainly be a $1+ billion deal for Intel. Zinsner's comments suggest that multiple potential advanced packaging customers are engaging with Intel, so this could be a multi-billion-dollar opportunity overall.
TSMC offers its CoWoS advanced packaging services, but supply is reportedly being outpaced by demand amid the AI boom. For Intel, advanced packaging could be an effective way to bring foundry customers in the door. Once those customers are comfortable with Intel as an advanced packaging supplier, they could expand the relationship to also include some semiconductor manufacturing.
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Momentum appears to be building for Intel Foundry
In addition to the Nvidia rumor, analysts appear confident that Apple will use Intel 18A from some M-series chips and potentially Intel 14A for some future iPhone chips. Packaging revenue will likely arrive sooner than manufacturing revenue, but either way, these potential deals are a positive sign for Intel's foundry ambitions.
Intel needs meaningful external customers for its foundry to justify the massive expense associated with keeping up with TSMC. The company may not be able to announce customer wins, depending on its agreements, but there will certainly be signs. Recent hiring at Intel's in-construction Ohio fab complex, which is set to be used for the Intel 14A node, suggests the company is becoming more confident in securing orders.
Investors should remember that the DigiTimes report has not been confirmed, and that any potential deal with Nvidia could fall through. However, this rumor is unequivocally good news for Intel.
