End of an era: Intel might move to outsourcing for chip manufacture

For years now, one of the things that has most clearly separated AMD and Intel was simply where their chips were physically made.

AMD, lagging behind Intel in almost every measurable way, sold off their chip foundries years ago to cut costs and raise capital, in a move which was largely considered indicative of their weak position at the time. Intel, by comparison, continued to own their own chip foundries, preserving a degree of vertical integration which was generally seen as a competitive strength.

But Intel has struggled to update their chip manufacture processes; their recent announcement that next year's Rocket Lake processor will, once again, be a 14nm chip, at a time when rival AMD is rumoured to be planning a move from 7nm to 5nm, speaks clearly to Intel's struggles in moving beyond 14nm chips to reach even 10nm, which would still be well behind the curve in terms of processor manufacturing.

If that last para made very little sense to you, here are the Coles notes: smaller is better when it comes to microprocessors, with smaller chip elements allowing chips to be smaller while having more capabilities, drawing less power, generating less heat, and running faster. This is the heart of Moore's Law, with the increasing areal density of transistors resulting in an exponential increase in computing power.

AMD's 7nm processors aren't just smaller; they're also better-designed, which is why their Zen 3 generation of Ryzen chips now outperforms Intel's products in every measurable way. But AMD didn't have to figure out the manufacturing process for Ryzen; TSMC had done that already, so AMD could just focus on design. Suddenly, what had seemed like a competitive disadvantage (i.e. AMD being forced to rely on a third party to bring the products to market) works to AMD's advantage.

So it probably shouldn't be a surprise that Intel, after spending the last several years being clobbered by AMD+TSMC, are finally flirting with outsourcing chip production themselves. As reported by The Oregonian:

Intel is laying the groundwork to toss the old model out the window. It is openly flirting with the notion of moving leading-edge production from Oregon to Asia and hiring one of its top rivals to make Intel’s most advanced chips.

The company says a decision is likely in January.

It’s a momentous choice that follows a string of manufacturing setbacks at the Ronler Acres campus near Hillsboro Stadium, failures that have cost Intel its cherished leadership in semiconductor technology – perhaps forever.

There's no guarantee that Intel will do this, of course; even if they do move forward, there's no guarantee that this change will save them (AMD's processors aren't just smaller, remember - they're also better-designed). But the simple fact that Intel are considering this move speaks to the weakness of their position; much like the AMD of years ago, Intel might just have no choice but to outsource, if they want to stay in business. Rocket Lake was their last, desperate attempt to steal some of AMD's Zen 3 thunder, and it totally failed; most tech media outlets didn't even notice the Rocket Lake announcement, or care, which is pretty much the prevailing sentiment where Intel are concerned, generally.

Intel are in serious trouble; they might not be on the verge of insolvency, but they are on the verge of irrelevancy, if they aren't already completely irrelevant to a PC industry that they were totally lording it over just two years ago. After years spent charging premium prices for tiny performance increases, moving to outsourcing now may just be too little, too late. 

Whatever the outcome, though, there's no doubt that a solid decade of Intel dominion over the PC is well and truly over. That era is at an end.