Intel May Be Killing Custom Fab Business

Intel Custom Foundry May Be No More

Nearly 5 years ago, Intel made a surprising announcement. After decades of only allowing their cutting-edge fabs to be used in-house, the company started up a custom foundry business. By opening up its fabs, the company hoped to better utilize them and recoup the expensive R&D costs. Unfortunately, things have not turned out that well. It is unsurprising now that Intel is reportedly planning to axe this business model.

Back in 2014, the company started up their custom fab business. The goal was to use their fab experience and market leadership to sell fab time. Intel Custom Foundry aimed to get better value out of the fabs for Chipzilla. At the time, the company had cutting-edge process technology, claiming a 3.5-year lead. With slowing demand, Chipzilla needed to keep their fabs busy and make back their massive costs. Due to their lead, customers with the firm would have the best process to work with.

Fab Business Model No Longer As Important

Unfortunately, things have not turned out well for Chipzilla in the intervening years. It has lost its process lead and is less competitive than before. Major competitors like TSMC even have a lead over Intel right now. The company is also facing shortages due to delays in 10nm, leading to 14nm supply shortfall. Keeping more supply to itself is important to their core CPU business. Finally, Chipzilla was secretive with their process information, careful to protect their technology from even fabless customers. Chipzilla also had fingers in many markets, so some competitors with major needs would have never gone to ICF either.

As a result of these problems, Intel had trouble attracting many deals. The biggest customer has been Altera FPGA which Intel has bought out. Based on these facts, it is not surprising that the company is killing off ICF. With the demand of Intel chips growing and future expansion into new markets, the company is deciding to focus their fabs for themselves. The company still has ambitions to enter the massive mobile market after all. It will be interesting to see where Intel will go from here.