In recent days, there has been much analysis and detective work devoted to figuring out what Intel's dabbling in the foundry business means as far as Intel's long-term future as a foundry player. But trying to read those tea leaves is a fool's errand. We do not yet know how involved Intel will eventually become in the foundry market. And neither does Intel.
Like my colleagues, I do not believe that Intel is poised to jump whole hog into the foundry business, competing with the likes of TSMC, UMC and Globalfoundries. The world's biggest chip vendor has in recent years dipped its toe in the foundry waters through deals with companies like Achronix, Tabula and Netronome. These firms are small, requiring production volumes that don't amount to a hill of beans compared to the mountain of Intel chips produced each day.
But we've also been told that Intel's three publicly disclosed foundry customers are just the tip of the iceberg. Intel is also working as a foundry for several other companies, including some large chip vendors. We can at this point only guess at who these companies are.
We also can only guess at how much Intel is charging its foundry customers for wafers. Customers, of course, bristle at the thought of discussing anything so uncouth. But it would seem a fair conclusion that Intel is charging a hefty premium, working for a set of customers (at least the publicly disclosed ones) that have everything to gain from access to Intel's unquestioned lead in process technology.
For the time being, Intel's strategy appears to be to work only with those customers who benefit so much from the leading-edge process technology that they are willing to pay dearly for it. But that could change in the future.
Mark Bohr, an Intel Senior Fellow who is the firm's process technology guru, told EE Times recently that Intel doesn't want to be in the general foundry business, competing against the likes of TSMC, UMC and Globalfoundries. But, at the same time, Bohr cast aspersions on the fabless-foundry model as is, claiming that the announcement that TSMC will offer only one flavor of 20-nm process technology means that Qualcomm and the like won't be able to use it. (Bohr's opinion is debatable, and neither Qualcomm nor TSMC have said anything of the sort).
In a conference call with analysts following Intel's quarterly report earlier last month, Intel President and CEO Paul Otellini was fairly non-committal about the company's dabbling in foundry, describing it largely as a learning experience (albeit one that generates profit). But Otellini also said, on the subject of Intel's long term aspirations in the foundry market, "I'll leave that point open." Later, Otellini discussed the "theoretical" possibility of Intel landing a heavyweight such as Apple or Qualcomm as a foundry customer.
Leaving the point open is precisely the right call. Because nobody knows yet where Intel is prepared to take this. It doesn't make sense at this point for Intel to hang its hat on foundry work to generate a sizable portion of its revenue. But Intel may yet one day decide that building wafers for other firms is easy money and set aside a larger portion of its total capacity dedicated for the purpose.
The problem for Intel—or any firm that does foundry work but also builds its own products—is what happens when business is booming. When the market heats up and Intel can sell its parts faster than it can make them, will foundry customers be pushed to the back of the line? At the moment, with the small volumes required by Intel's publicly announced foundry customers, that would seem to be a non issue. But throw a customer or two the size of Qualcomm or Apple into the mix and the situation changes dramatically.
Ultimately, this might prove to be the key question in how big a foundry player Intel wants to be. Because once Intel decides to sign some customers of significant size, the company has to be committed to supporting them, even at the expense of cutting into sales of its own chips. This may well prove to be a bridge further than Intel is willing to go. But there is no need for the company to make that decision now. For now, Intel gains knowledge, experience and profit while at the same time stirring the pot by being a nuisance to some of its competitors as well as the pure play foundries. How far will it go? The point remains open.