Intel Corporation (NASDAQ: INTC) has been making dramatic changes to its PC chips in an effort to regain its former glory on the front. The chip giant adopted a heterogenous architecture to mix powerful cores with smaller efficiency cores and this strategy in an effort to strike back its rival Advanced Micro Devices Inc (NASDAQ: AMD).
Intel is building out a foundry business of its own as it attempts to reclaim its manufacturing lead from Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and ensure its chips have a competitive advantage over those made by AMD.
Restructuring Of The Manufacturing Business
On Wednesday, the chip giant announced that the manufacturing unit will now be operating as a separate unit. Although the business is expected to generate a margin, no precise timeline was given, with shares dropping 5% as a result.
Manufacturing Services Are An Essential Part Of Intel’s Turnaround Plans
As part of its turnaround strategy, Intel will be offering its its manufacturing services to other companies including its competitors. A major external foundry customer will be announced later this year with CFO David Zinsner confidently stating during the investors call that that the model empowers Intel to become the second largest foundry as early as next year with manufacturing revenue exceeding $20 billion. However, Summit Insights Group analyst Kinngai Chan pointed out that this forecast is pale when compared to sales of Taiwan Semiconductor Manufacturing, which are expected to come near to $85 billion next year, a figure that clearly shows TSM’s supremacy. Chan concluded that Intel simply revealed that its current manufacturing is sub-scale and could remain so for a while.
Big Changes Are Coming With Meteor Lake Chips
After many years of manufacturing delays, obstacles and setbacks, Intel will be rolling out five new process nodes in a four-year span. Following the footsteps of its rival AMD, Intel is adopting a tile-based architecture. Meteor Lake CPUs will feature distinct tiles, each of which can be manufactured on different processes. The CPU tile will use Intel 4, while other tiles dedicated to graphics and other functions will be manufactured by TSM. By adopting the tile-based architecture, Intel will be able to mix and match manufacturing technologies. While this approach increases the complexity of the manufacturing process, it also reduces development times and costs because most advanced manufacturing technology isn’t wasted on tiles that are not able to benefit from it as these are sorted to cheaper and older ways of doing.
It's AI Time
With the tile-based architecture, Intel is bringing AI with Meteor Lake chips that will come with a dedicated AI processor, named the VPU. Although running a ChatGPT-like program on a PC won’t be possible anytime soon due to the complex requirements, plenty of AI tasks could potentially come to our simplified devices. Moreover, dedicated AI hardware will allow Intel to free up the CPU and GPU, and this could result in improved speed that users tend to appreciate.
If Intel Pulls It All Off, Many Rewards Are On The Way
Collectively, all the above changes have the potential to help Intel cement its lead in the PC CPU market. Intel is going all in by risking with a new manufacturing process, a new architectural structure, and a new type of AI processor, and it is doing it all at the same time. But if it makes it work, these moves will pay off in a big way. However, AMD will certainly not be standing still with its shares skyrocketing 92% year-to-date as it geared up its AI chips game to catch up to Nvidia Corporation (NASDAQ: NVDA) whose shares as much as tripled this year. Considering that everyone wants a part of the AI chip pie, the game will be intense, to say the least.
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