Shares of Intel (INTC +2.24%) rose on Tuesday after the chipmaker highlighted the advancement of its all-important foundry expansion strategy.
Image source: Intel.
Yields are improving
During an interview with CNBC's Jim Cramer, Intel CEO Lip-Bu Tan said the semiconductor giant's chip manufacturing operations were making notable progress toward its production goals.
Importantly, Intel's manufacturing yield -- the percentage of functional chips produced from a silicon wafer -- is increasing at an impressive rate.
"The best practice is to see 7% or 8% yield improvement per month, and now I'm seeing it," Tan said.
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Key Data Points
Unlike semiconductor designers like Nvidia and Advanced Micro Devices, who rely on foundry partners like Taiwan Semiconductor Manufacturing Company (TSMC) to fabricate their chips, Intel uses a more vertically integrated model and manufacturers many of its own chips.
Intel is trying to expand its manufacturing operations by enticing more chip designers to use its foundry services. It's been a hard sell, as TSMC has long enjoyed significant technological and cost advantages over Intel.
Yet geopolitical concerns and supply chain disruptions are forcing many companies to reevaluate their chip production networks. Additionally, both the Biden and Trump administrations have sought to foster domestic chipmaking via tax savings and other incentives. These trends are working in Intel's favor.
Intel's tech could rival that of TSMC
Moreover, Tan said Intel was closing the technological gap with its competitors. He believes Intel's next-generation 14A process could rival TSMC's most advanced tech.
"It will be the same time as TSMC," Tan said. "That is a major, major breakthrough."
