Intel Expands Foundry Services for Outside Chip Designers

Intel plans to open up its small semiconductor foundry business to more companies as part of a major strategic overhaul under a new leadership team headed by CEO Brian Krzanich."We're going to go much further. If we can utilize our silicon to provide the best computing, we'll do that. People who can use our leading edge and build computing capabilities that are better than anyone else's, those are good candidates for our foundry service," Krzanich was quoted as saying by Reuters during the company's annual Analyst Day on Thursday.Intel has traditionally utilized its state-of-the-art silicon fabrication facilities to manufacture its own x86-based microprocessors on a near-exclusive basis. But a few years ago, the chip giant started sending signals that it was considering selling its manufacturing services to other chip design firms. Early last year, Intel confirmed that it had been quietly offering semiconductor manufacturing bagfilterchinaservices to third-party customers while bringing its state-of-the-art 22-nanometer fabs online.This all occurred as the company's erstwhile bitterest rival, Advanced Micro Devices, spun off its own manufacturing assets and Intel found itself struggling to compete in the mobile device market with fabless companies like Qualcomm. At the same time, Intel watched as Samsung supplied Apple with foundry services for the chips in iPhones and iPads, even as the South Korean tech giant managed to also compete directly with Cupertino with Android-based handsets and tablets. 

These shifts in market dynamics largely put Intel in a position of standing on the sidelines of a consumer device revolution being driven by others, with ARM-based processors dominating the new flood of sleek new smartphones and slates coming out each year."We'd become insular. We'd become focused on what was our best product rather than where the market was moving," Krzanich said at this week's gathering.Intel's new chief executive and recently named company president Renee James have been busy outlining a bold new strategy for the company since assuming their leadership roles this past May.The chip giant has vowed to be much more aggressive and quicker to move on market circumstances in its overall mobile strategy. Intel this week announced that it is pulling in the release schedules for products like its second-generation XMM 7260 LTE platform in response to customer demand.Intel also revealed that it is developing a new System-on-a-Chip (SoC), code named SoFIA, which combines an Atom processor and Infineon-developed 3G, Wi-Fi, Bluetooth, FM radio, and GPS capabilities in a single integrated package. The twist is that Intel is repurposing an Infineon chipset that originally used an ARM-based application processor in the role Intel's x86-based Atom will play in SoFIA. 

And in another departure from its long-held manufacturing principles, Intel will fab the initial lineup of SoFIA SoCs at a third-party foundry. More than anything, that seems to signal the company's willingness to change up how it does business to finally make a noticeable dent in the mobile device arena.Opening up its own factories to third parties, possibly including some direct competitors, is a being billed as a major part of Intel's strategic overhaul—but just how far the company goes with its foundry services remains to be seen, said Jack Gold, principal analyst for J.carbon fabric Gold Associates."Intel runs the best process/foundry in the business and there is no shortage of companies that would love to use the facilities. In the past, Intel has been extremely selective as to who they would manufacture for. I think that will still be the case." Gold said."I don't see Intel becoming the low-price, high-volume leader in foundry services like a TSMC is. That said,thermos flask there are lots of premium-grade chips that Intel could manufacture for companies. For Intel, it's about keeping their massive investments in foundry capacity running at near or full capacity."Patrick Moorhead, principal analyst for Moor Insights & Strategy, said the promised expansion of foundry services plus the SoFIA news signaled "just how serious Intel is" about overhauling its entire manufacturing strategy."This all makes sense in that Intel's entire business model hinges on them maximizing fab utilization. As Intel announced their low-end SoFIA smartphone parts will be built outside of Intel, they have got to have a substantial foundry business," he said.