In order to counter the competition from chip rivals such as AMD and NVIDIA, Intel reportedly plans to scale up its outsourcing efforts by handing over to TSMC more 3nm orders for its upcoming Lunar Lake and Arrow Lake chipsets in 2025, according to industrial sources cited by Commercial Times.

TSMC will continue to secure a large volume of outsourced business from IDMs, maintaining a strong cooperative relationship with Intel, acording to the Commercial Times report.

According to the report, Intel aims high for Arrow Lake as the chipset will feature two TPUs (Tensor Processing Units), allowing it to maintain high performance and high clock speeds while reducing power consumption by at least 100 watts. As the result, the product is regarded by Intel as a critical advantage for maintaining its lead in the AI PC market.

Intel’s Arrow Lake, its 15th generation CPU, features significant changes in both architecture and manufacturing process, along with a new name—Core Ultra 200S, according to its press release.

According to the Commercial Times, the processor is not only built using TSMC’s 3nm process, with a substantial reduction in computational core area and energy consumption, but also moving away from the traditional SoC design by adopting Intel’s exclusive 3D Foveros technology.

Foveros, Intel’s 3D advanced packaging technology, is a first-of-its-kind solution that enables the building of processors with compute tiles stacked vertically, rather than side-by-side, according to its press release. The focus of this new design is on energy efficiency, reducing packaging power consumption, and enhancing multi-core performance, the report notes.

According to the supply chain sources cited by the Commercial Times report, the Intel 7-Series chipsets in the 13th and 14th generations, in spite of adopting an 8P+16E (8 Performance-core and 16 Efficient-core) core configuration, the compute tile area still accounted for as much as 70% of the total chip area. However, by switching to TSMC’s 3nm process, the same core configuration now takes up only a third of the total area, while allowing the space for an additional NPU unit.

Though Intel has not given up its foundry unit, the struggling giant does seem to gradually loose competitiveness in advanced nodes, and it has outsourced several products to TSMC. The company’s latest flagship AI processor, Gaudi 3, is fabricated with TSMC’s 5nm.

Recently, in order to reduce costs and better prepare for its in-house 18A process, Intel has decided to abandon the introduction of the 20A node, and leverages TSMC’s process for the Arrow Lake chipset.

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• [News] Intel Impresses the Market with Upbeat Q4 Guidance; 18A to Begin High-Volume Production in 2H25
• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?

(Photo credit: Intel)

According to Tom’s Hardware, citing a report from HardwareLuxx, Intel has postponed  its Magdeburg fab project to 2029-2030, raising concerns in Germany about whether the allocated funding should be returned to the federal budget.

The German government took some time to secure €10 billion in funding for Intel’s Fab 29 project near Magdeburg. However, construction has faced multiple delays due to various challenges, including Intel’s worsening financial situation. These issues have ultimately led to a temporary halt in the project, pushing its completion timeline further into the future.

The report from Tom’s Hardware indicates that Intel has decided to delay the project restart until 2029 or 2030. If the project is indeed halted until then, it would severely impact Germany’s semiconductor industry development plans and raise concerns about the future use of the €10 billion in subsidies initially allocated to Intel, including whether these funds should be reallocated.

The report pointed out that, according to the original plan, Intel was expected to receive the first portion of the €10 billion subsidy in 2024, which was approximately €3.96 billion. However, with the project on hold, these funds are now postponed.

The report highlighted that Germany’s Finance Minister, Christian Lindner, has advocated reallocating the subsidy to meet other economic needs, which could help Germany’s finances amid current economic pressures. However, Vice Chancellor and Minister for Economic Affairs Robert Habeck opposes this approach, arguing that the funding should continue to support long-term economic growth and environmental initiatives.

As for whether Intel can soon restart the project, the report indicated that, citing industry sources, given Intel’s current financial difficulties, the probability of the Magdeburg fab project resuming is now less than 50%, and there is a significant chance that Intel may ultimately abandon the project entirely.

Furthermore, the report pointed out that if Intel decides to proceed with the Magdeburg fab, it may need to renegotiate with the German federal government over subsidy details, while given the global economic environment over the next few years, securing large subsidies may be challenging.

On the other hand, if Intel ultimately abandons the Magdeburg fab project, Germany would also face issues related to land use. The report noted that the initial land development was tailored specifically for this facility, which could make it difficult to repurpose the site efficiently in the short term, potentially hindering local economic development plans.
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• [News] Intel’s Plant Delay Casts Doubt on German Economy, with Chances of Proceeding Estimated at No More than 50%
• [News] Intel’s 1nm-class Fabs in Germany Reportedly Delayed Due to Black Soil Concerns and Pending EU Subsidy Approval

(Photo credit: Intel)

According to a report from TechNews, citing the Reuters, Silver Lake, Bain Capital and other potential acquirers are planning to acquire a minority stake in Altera, Intel’s programmable chips division.

Altera, a market leader in FPGAs, was acquired by Intel in 2015 for nearly USD 17 billion, with the initial goal of expanding Intel’s presence in the Internet of Things market. However, given Intel’s current financial pressures, Altera has become a business that can be spun off and sold.

Sources indicate that Intel hopes to sell Altera for a price similar to what it paid when acquiring the company in 2015. While it is unclear how much of Altera’s stake Intel plans to sell, any potential deal is expected to be valued at several billion dollars, according to the Reuters.

The Reuters report, citing industry sources, revealed that Intel has started the process of spinning off Altera as a separate company and has begun preliminary steps to sell Altera shares. Sources also noted that while negotiations are still in the early stages, Intel expects to receive initial bids from potential buyers in the coming weeks, according to the report.

In addition to Silver Lake and Bain Capital, the Reuters report mentioned that, citing industry sources, private equity firm Francisco Partners has also shown interest in acquiring a stake in Altera and is expected to be among the bidders.

According to the Reuters, for the quarter ending September 30, Intel announced that Altera’s revenue grew 14%, reaching USD 412 million. During the post-earnings conference call, Intel CEO Pat Gelsinger stated that the company is focused on selling a stake in Altera as part of its path toward an IPO in the coming years. He added that discussions with potential investors are underway, with a conclusion expected in early 2025.

The Reuters report noted that the transaction is expected to provide Intel with a much-needed cash injection. Despite announcing an optimistic revenue forecast in its latest quarterly report, Intel’s stock is down over 50% this year, as the company has missed the AI boom and is facing challenges to turn things around.

Notably, the Reuters report pointed out that before Intel acquired Altera, Altera had many of its chips manufactured by TSMC. Following the acquisition, Intel planned to shift Altera’s chip production to its own factories, while at that time, Intel was beginning to lose its manufacturing lead to TSMC.

According to the report from the Reuters, Intel’s transition of Altera’s production to its own factories proved to be lengthy and expensive. This move contributed to Altera losing market share to its main competitor, Xilinx, which was later acquired by AMD.

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• [News] Intel Reportedly Aims to Raise Billions through Sale of Minority Stake in Altera
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(Photo credit: Intel)

According to a report from Wccftech, citing information from Semafor, the US Commerce Department is reportedly exploring ways to assist Intel, which may include a potential merger deal.

The report from Wccftech highlighted that Intel is the only US-based company with “mature” processes and facilities, making it a crucial component of the U.S. aim to achieve self-sufficiency in semiconductor production.

Previous rumors indicated that Intel might be acquired by companies such as ARM or Qualcomm. Regarding this potential acquisition, Qualcomm’s CEO Cristiano Amon stated that the company is exploring its options, with a decision anticipated after the US elections, according to the report from Wccftech.

The report highlighted that U.S. policymakers are also considering a merger deal, viewing it as acceptable for Intel to merge with native companies such as AMD or Marvell.

However, the report also noted that as the U.S. places significant importance on the foundry division, the potential sale of the chip business is still considered a viable option, which could involve companies such as Qualcomm, ARM, or even AMD.

Notably, Intel is expected to receive USD 8.5 billion in grants and USD 11 billion in low-interest loans from the U.S. government under the CHIPS Act. However, the funding has been delayed, as the report mentioned.

According to the report from Semafor, Intel’s outlook for the fourth quarter is better than expected, and on its earnings call last week, CEO Pat Gelsinger stated that the company is on schedule to start producing its most advanced chips, referred to as 18A, next year.

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• [News] Intel Impresses the Market with Upbeat Q4 Guidance; 18A to Begin High-Volume Production in 2H25

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Intel posted its third-quarter earnings earlier on October 31. Recording a lackluster performance with quarterly revenue declining 6% year-over-year to USD 13.3 billion and a net loss of USD 16.99 billion, the struggling giant manages to impress the market with an upbeat guidance for the fourth quarter, with revenue expected to rise to USD 13.3 billion to USD 14.3 billion, according to its press release.

According to a report by Reuters, the better-than-expected outlook originates from the company’s optimism about its future of PC and server business.

As a leading PC chipmaker, Intel has seen a boost from the introduction of on-device AI features and a new Windows update cycle, which has rekindled demand for PCs following a prolonged slump. This has helped Intel exceed Wall Street’s modest expectations, according to Reuters.

New External 18A Design-wins; TSMC Used “Selectively” in the Future

It is worth noting that Intel highlighted the positive progress on its advanced nodes. The report, citing CEO Pat Gelsinger during a post-earnings call, notes that the high-volume production of Intel’s 18A node is scheduled to begin in the latter half of 2025, with most production dedicated to Intel’s own products. The company suggests that there are several new external Intel 18A and advanced packaging design wins.

Gelsinger also highlighted the role of TSMC as its foundry partner, adding that over the coming years, foundry revenue will largely stem from Intel’s products, with contract manufacturer TSMC being used “selectively” in the future, according to the report.

Restructuring Charges Weighs on Q3 Earnings

In the third quarter, Intel reported a loss of USD 0.46 per share on revenue of USD 13.3 billion. This represents a significant decline from the previous year, when the company posted earnings of USD 0.41 per share and revenue of USD 14.1 billion in the same quarter.

Restructuring charges meaningfully impacted Q3 profitability as the company took important steps toward its cost reduction goal, said David Zinsner, Intel CFO.

According to CNBC, in line with its cost-cutting strategy, Intel incurred USD 2.8 billion in restructuring charges this quarter, alongside USD 15.9 billion in impairment costs, partly due to accelerated depreciation of Intel 7 process node manufacturing assets and goodwill impairment within its Mobileye division. As a result, its adjusted gross margin dropped to 18%, compared with 38.7% of the previous quarter.

The report by CNBC reveals that on October 28^th, Intel disclosed in a filing that its board’s audit and finance committee approved measures to cut costs and capital expenses, including reducing its workforce by 16,500 and downsizing its real estate footprint. These job cuts, initially announced in August, are expected to be fully implemented by the fourth quarter of 2025.

Data Center Remains the Sole Growth Driver in Q3

Revenue from Intel’s Client Computing Group, which encompasses its PC chips for desktops and laptops, declined by 7% year-over-year to USD 7.3 billion.

In the data center segment, which includes AI chips, Intel reported a 9% year-over-year increase in revenue to US 3.3 billion.

Meanwhile, revenue from Intel’s contract manufacturing (foundry) business dropped to USD 4.4 billion, marking an 8% year-over-year decline.

2025 CapEx: Between USD 12 billion and USD 14 billion

On the other hand, CFO David Zinsner shared with Reuters that Intel plans USD 12 billion to USD 14 billion in capital expenditures for 2025.

In the previous earnings call, Intel has announced an over 20% reduction on its capex in 2024, bringing gross capital expenditures in 2024 to between USD 25 billion and USD 27 billion, with net capital spending in 2024 expected to fall between USD 11 billion and USD 13 billion.

Read more

• [News] Intel Steps Back from AI Race with NVIDIA, Shifts Focus to Cost-Effective Solutions with Gaudi 3
• [News] Intel’s Third-Quarter Revenue Set for Largest Decline in Five Quarters?

(Photo credit: Intel)