Intel is reportedly seeking to form a “wafer foundry alliance” with Samsung to counter Taiwan Semiconductor Manufacturing Company (TSMC), according to Korean media reports. Senior executives from both companies may hold talks to discuss details of cooperation, including process technology exchange and production facility sharing. If Intel shifts its chip orders to Samsung, TSMC may face the risk of losing outsourced orders.
Title: Intel Seeks Alliance with Samsung to Counter TSMC
Intel, once a leading player in the semiconductor industry, is facing a crisis and is reportedly considering strategies such as splitting its IC design and wafer foundry businesses, abandoning certain projects, and potential acquisitions. Now, Intel is actively seeking external collaboration and adopting a strategy of “alliance with secondary rivals to counter the main competitor” in an attempt to overcome this dark period.
According to South Korean newspaper “Maeil Business,” Intel is seeking to form a “wafer foundry alliance” with Samsung to counter TSMC. If this collaboration becomes a reality, it is expected to bring competitive pressure to TSMC.
The report states that Intel recently proposed high-level talks with Samsung to discuss a “comprehensive cooperation plan for the foundry sector.” Top executives from both companies, including Intel CEO Pat Gelsinger and Samsung Chairman Lee Jae-yong, would discuss this plan face-to-face. However, both Samsung and Intel have stated that they cannot confirm whether these high-level meetings will take place.
Both Intel and Samsung have recently faced operational difficulties. Since entering the integrated foundry services (IFS) in 2021, Intel has failed to attract a large number of orders, only signing contracts with Cisco and AWS. In addition, its core business of computer CPUs is facing fierce competition from Advanced Micro Devices (AMD) and the ARM architecture camp, and its performance in the AI accelerator market it tried to enter is also falling short of expectations.
As for Samsung, since establishing its wafer foundry division in 2017, it has been plagued by problems such as product yield not meeting customer requirements, leading to a widening gap in market share with TSMC. Furthermore, in the competition in the high-bandwidth memory (HBM) market, Samsung has been surpassed by SK Hynix, endangering its position as the former leader in memory.
According to market research firm TrendForce, in the global wafer foundry market share in the second quarter of this year, TSMC ranked first with 62.3%, while Samsung accounted for only 11.5%, and Intel almost zero. Especially in the field of advanced process technology such as 3nm and 5nm, TSMC holds a significant competitive advantage with a market share of up to 92%.
If Intel and Samsung form a “foundry alliance,” Korean scholars believe that this could generate significant synergies. However, due to TSMC’s solid leading position, it may be difficult to have a major impact on TSMC in the short term.
Nevertheless, according to an analysis by the “Economic Daily News,” it is estimated that it will be challenging for Intel to seek cooperation with Samsung based on its “almost zero” market share in the foundry business unless Intel provides substantial incentives. Its most significant bargaining chip is its substantial demand for outsourced production of its own chips. If Intel redirects its orders to Samsung in order to win over Samsung, TSMC may face the risk of losing Intel’s foundry orders.
Coincidentally, in the IC design field, Intel has formed the x86 Alliance with companies such as AMD to counter the impact of Arm architecture processors led by Arm on the x86 market share and indirectly impact NVIDIA’s influence in the AI market.
In response to this, NVIDIA CEO Huang Renxun is optimistic, stating that NVIDIA supports the x86 architecture in PC, workstations, and data centers, and this alliance helps ensure the unity of the x86 architecture and prevent it from being divided. Therefore, he considers this to be a good thing.
It is worth continuing to pay attention to whether Intel’s “alliance with secondary rivals to counter the main competitor” strategy can bring a lifeline to the company.
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