Intel Needs a Big Customer for Foundry Business to Survive

Max A. Cherney and Stephen Nellis, reporting for Reuters:

Those customers for the company’s so-called 14A manufacturing process are crucial to the success of the technology — so much so that if it fails to secure a big one, it could shut down its cutting-edge manufacturing business altogether, according to Intel’s quarterly filing on Thursday.

The possibility that Intel could drop out of the cutting-edge manufacturing business would be a historic shift for a company that has described itself as a steward of Moore’s Law — an observation by Intel co-founder Gordon Moore about the fast rate of development of the chip industry that held true for decades. Intel is the only U.S. chipmaker capable of making advanced computing chips.

Intel has struggled for years due to management missteps, missing out on the AI race and losing market share to its longtime rival AMD.

The beginning of the end for Intel was long before the AI race or the market share they’ve lost to AMD. It was missing out on mobile. From a 2013 profile of then-CEO Paul Otellini, by Alexis Madrigal for The Atlantic:

But, oh, what could have been! Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple’s Mac business, he decided against doing what it took to be the chip in Apple’s paradigm-shifting product.

“We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we’d done it,” Otellini told me in a two-hour conversation during his last month at Intel. “The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn’t see it. It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100× what anyone thought.”

That was it, the beginning of the end. It’s not just that mobile computing, as defined by the iPhone, became the largest market, by far, for chips, but that the needs of mobile devices defined the future of leading edge chipmaking across all industries: performance-per-watt, not merely sheer performance. As mobile grew, so went the economies of scale, which resulted in Apple Silicon eventually beating x86 chips not just in performance-per-watt but also in single-core performance.

★ Saturday, 26 July 2025