One of the most critical moves of Intel’s next step, regarded by CEO Pat Gelsinger as “the most significant transformation in over four decades,” is turning its foundry business into an independent subsidiary. Citing remarks from foreign media and analysts, a report by Taiwanese media outlet Anue notes that this is a much-needed temporary measure aimed at gaining the trust of potential customers, who may hesitate to entrust their chip designs to a competitor’s foundry division.

Following last week’s board meeting, Intel announced on September 16^th that the company will transform its foundry business into a wholly-owned subsidiary with its own board of directors.

It is worth noting that in the meantime, Intel signed a multi-billion-dollar, multi-year agreement with Amazon to produce certain chips for Amazon Web Services’ (AWS) AI data centers.

The Two tech giants will co-develop AWS’ next-gen AI fabric chips on Intel 18A, which signals a good start for Intel. Additionally, Intel is developing customized Xeon 6 server chips for AWS.

Regarding Intel’s plan on carving out its foundry business, citing comments from foreign analysts, the report by Anue states that the move could help Intel in having a better chance of attracting tech heavyweights, such as Apple, Qualcomm, Broadcom, and even AMD.

Here is why: if the new company appears as an independent entity and if it has the right board members, the foundry business could progress more smoothly, the report suggests. This move should help alleviate concerns from potential customers, but its effectiveness will yet be proven through execution.

The report added that if Intel’s collaboration with Amazon goes well, it could potentially manufacture other Amazon chips in the future, such as AWS Graviton processors and Trainium AI training chips used for machine learning.

Intel has failed to attract a significant number of clients for its foundry business, with Microsoft being its largest customer to date, the report notes.

Two years ago, the struggling giant lost the contract to design and manufacture chips for Sony’s next-generation PlayStation 6, dealing a major blow to its efforts to establish its nascent foundry business.

In its own words, the move in terms of the new subsidiary structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

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(Photo credit: Intel)

The struggling giant seems to gradually get a turnaround, as Intel reportedly settles down plans for restructuring after the board meeting. Intel, according to a latest report by CNBC, reveals schemes to transform its foundry business into an independent unit with its own board. Moreover, the strategy will allow the foundry business to explore “independent sources of funding,” the report notes.

In a post released on September 16^th, CEO Pat Gelsinger refers to the next phase of Intel’s transformation as “the most significant transformation of Intel in over four decades. Not since the memory to microprocessor transition have we attempted something so essential.”

The plan for its foundry unit to secure outside funding would be critical, as the business has weighed heavily on Intel’s finances, with the company spending around USD 25 billion on it annually over the past two years, CNBC suggests.

It is worth noting that Intel is thinking something even bigger regarding its foundry business, as it is having the ambitious idea that in addition to possibly spinning it off, it may mull to transform the business into a separate publicly traded company, according to a source familiar with the matter cited by CNBC.

The report notes that with the establishment of an independent operating board and a streamlined corporate structure, separating the business becomes significantly easier for Intel, especially compared to the challenge of turning a fully integrated unit into a standalone company.

Along with the decision, other details of Gelsinger’s efforts have surfaced. CNBC notes that the semiconductor heavyweight would also divest a portion of its stake in Altera, according to a memo to the company’s employees.

Regarding its plan on overseas expansion, according to CNBC, citing Gelsinger’s remarks, Intel will delay its fabrication projects in Poland and Germany by roughly two years due to projected market demand. Additionally, the company will scale back its plans for its factory in Malaysia.

Intel’s decision on the delay of the two projects in Europe, partly funded through state aid, would be a heavy blow to EU, as the region tries to boost its domestic semiconductor industry to increase its resilience and independence. The EU Chips Act, in force since September 2023, aims to double Europe’s share of global semiconductor manufacturing to 20% by 2030.

According to a report by EURACTIV, Intel’s €30 billion investment in Magdeburg, Germany, is the largest project envisioned under the EU Chips Act, with one-third of the funding coming from German subsidies. In Poland, Intel’s €4.2 billion project has also been recognized as the “largest investment in Polish history,” with €1.7 billion (PLN 7.4 billion) expected to be provided through state aid.

Notably, as the company proactively pursues the support of the U.S. government, it is holding steadfast on its investments in the country. Intel’s U.S. manufacturing projects will continue as planned, according to CNBC.

Intel plans to invest USD 100 billion over the next five years in new fabs and expansions across Arizona, New Mexico, Ohio, and Oregon, creating 10,000 manufacturing jobs and 20,000 construction jobs.

The semiconductor giant’s Fab 52 and Fab 62 in Arizona are previously scheduled to be completed in 2024. However, The Register notes that the schedule may be delayed a bit, as the fabs are likely to begin operations later this year or in early 2025, targeting to manufacture chips using Intel’s next-generation Angstrom-era process technology, including the 18A node.

The company is slated to receive USD 8.5 billion in grants and USD 11 billion in loans under the 2022 Chips and Science Act, but this funding is contingent on meeting key milestones and undergoing extensive due diligence. However, an official cited by CNBC said that disbursements are anticipated by the end of the year.

(Photo credit: Intel)

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(Photo credit: Intel)

Regarding the continuous struggle of its foundry business, Samsung has reportedly decided to make another move, as its semiconductor division (DS) plans to undertake a major organizational restructuring within the year, according to a report by Chosun Biz.

Through the restructuring, DS Division President (Vice Chairman) Jeon Young-hyun is said to focus on addressing major issues related to organizational culture, such as the lack of communication between departments and team self-interest, the report notes.

The revelation follows Samsung’s reported up to 30% layoffs in overseas workforce last week, as noted by Reuters. The plan, set to be implemented by the end of this year, will affect jobs across the Americas, Europe, Asia, and Africa.

Citing industry sources, the report indicates that Samsung Electronics’ DS division plans to strengthen collaboration processes by integrating existing team-based structures into a project-centered model, with an aim to resolve issues arising from the siloed operation of departments.

As a comprehensive semiconductor company with a broad range of businesses, Samsung faces quite a few challenges, while the proliferation of business units and task forces leads to competition and friction between departments. In the development of chips or processes, differing interests among departments—such as semiconductor design, fabrication, and reliability evaluation—can cause communication problems, which may ultimately lead to business failures.

Samsung has been fighting to catch up with its rivals, not only in the foundry sector but in memory as well. Chosun Biz notes that the Korean semiconductor giant is lagging behind competitors in areas like high-bandwidth memory (HBM), cutting-edge DRAM, and foundry technology over the past 2-3 years, which may be attributed to this organizational culture.

Samsung’s foundry division has been working out to mass-produce 3-nm GAA (Gate-All-Around) technology for around three years but still struggles with customer acquisition. A report by The Korea Times states that the yield for Samsung’s 3nm process remained in the single digits until Q1 this year, and slightly improved to about 20% in Q2, though still significantly below the 60% threshold generally needed for mass production.

In terms of DRAM, Samsung seems to gradually lose the leading edge as it has started to fall behind SK hynix, especially in the HBM market. In its latest attempt, Samsung teams up with its foundry rival, TSMC, on the development of HBM4, according to Business Korea.

Moreover, Samsung is facing challenges on the DDR5 DRAM market. Chosun Biz suggests that discrepancies between the quality goals set by the development department and the actual specifications of the mass-produced product delayed Samsung’s entry into the server DDR5 DRAM market by more than 3-6 months, compared to SK hynix.

The report took its setback in the 10-nm 5th generation (1b) DDR5 server DRAM last year as an example. The product, which supplied to Intel, failed to meet the promised performance and was deemed substandard.

In early September, another report by Korean media outlet ZDNet reveals that the tech giant might be facing difficulties in its cutting-edge mobile DRAM, as Samsung’ Mobile eXperience (MX) Division reportedly raised concerns with the DS Division about delays in the delivery of 1b-based LPDDR (low-power DRAM) samples, which are intended to be used in the Galaxy S25 series.

A Samsung Electronics spokesperson cited by Chosun Biz admitted that there continues to be a disconnection between the departments developing new processes and those responsible for mass production, with serious issues arising from the shifting of blame for failures.

However, would Samsung’s latest effort work out? An industry insider cited by the report notes that Intel has attempted to make a change through the “IDM 2.0” strategy over the past three years, but solving these issues in a short period of time has proven difficult. He suggests that it is necessary to go beyond just restructuring to fundamentally change the organization.

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(Photo credit: Samsung)

Ahead of AMD’s October launch of Instinct MI325X, the U.S. chip giant is said to have several issues with its laptop OEMs, which results in poor execution, a report by Tom’s Hardware notes. Citing remarks from analysts, the report describes the two parties’ relation now as a “Cold War ice age,” hurting their mutual trust.

The report, citing AC Analysis, says that the main contradiction arises from AMD’s current strategy of prioritizing enterprise chips over consumer products, with laptop OEMs complaining about the “miscommunication, unfulfilled promises, and generally poor treatment.” The situation, according to them, is similar to Intel’s behavior during its peak years.

It is interesting to note that the situation seems to coincide with AMD CEO Lisa Su’s recent exclamation that AMD is a “data center-first company,” as data center contributed to over 50% of the company’s revenue last quarter.

Another report by German media outlet ComputerBase also reports that AMD is still suffering from the same challenges it has had in the past. For instance, problems with supply and related issues have delayed the release of new Strix Point laptops. According to ComputerBase, one source even accused AMD of probably leaving billions of US dollars on the table with its partners over the years.

Tom’s Hardware observes that due to the aforementioned reasons, the reaction of AMD’s Strix Point chips among OEMs has been somewhat tepid, despite consumer interest.

The report notes that currently, BestBuy offers only three brands with AMD’s latest chips—Asus, HP, and MSI. HP and MSI each have one model, while Asus has 13 models featuring the AMD Ryzen AI 300 series chip.

This is in sharp contrast with Qualcomm, the report notes. Even the company is a latecomer in the laptop market, the smartphone chip giant’s launch of the Snapdragon X processor generated significant excitement among both the public and laptop manufacturers, as seven brands have already released 12 different models featuring the new Arm chip.

AMD is also lagging behind its rival Intel, which still dominates the laptop market despite its recent slump. According to Intel, its Lunar Lake, manufactured with TSMC’s 3nm, is expected to power more than 80 new laptop designs across more than 20 original equipment manufacturers, delivering AI performance at a global scale for Copilot+ PCs.

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(Photo credit: AMD)

For Intel, there are finally some good news around the corner. According to a report by The Register, the EU has approved USD 1.9 billion in aid for the struggling giant’s plant in Poland, but with the condition that the company does not abandon the project amid its crisis.

The information was announced on Friday by Poland’s Deputy Prime Minister Krzysztof Gawkowski, the report notes, that the European Commission has approved a state aid package of USD 1.9 billion (7.4 billion zlotys) for Intel. Citing Gawkowski’s remarks, the report reveals that the investment, including the aid package and overall costs, amounts to more than USD 6.47 billion (25 billion zlotys).

The announcement follows just over a year after Intel revealed its intention to build a USD 4.6 billion assembly and testing facility near Wroclaw, Poland. According to The Register, this project is expected to complement Intel’s other projects in the region and beyond, including its€30 billion chip fabrication plant in Magdeburg, Germany.

According to Intel’s previous announcement, the investment in Poland will contribute to the Europeans goal of bringing back 20 percent of global semiconductor manufacturing capacity to the region by 2030. The company states that its planned back-end manufacturing investment in an assembly and test facility in Poland, combined with the existing fab or front-end chip manufacturing site in Ireland and the planned chip manufacturing site in Germany, will create an end-to-end leading-edge semiconductor manufacturing value chain in Europe.

A rendering shows the state-of-the-art semiconductor assembly/test facility that Intel announced plans to build in Wrocław, Poland. Announced on June 16, 2023, the site will help to meet demand for assembly and test capacity that Intel anticipates by 2027. (Credit: Intel)

However, it is worth noting that due to delays of subsidy approvals. Intel has already been said to postpone its construction of Fab 29.1 and 29.2 in Magdeburg, as the new timeline now pushes the start of construction to May 2025. As the possibility of putting a halt to the German project could not be ruled out amid the company’s crisis, whether a follow-up plan regarding delaying or canceling the Polish plant comes into spotlight.

The Register notes that Intel had previously stated that the Polish facility would employ around 2,000 workers and would be responsible for processing raw wafers produced by nearby fabs, cutting them into individual chips and chiplets for packaging.

If Intel’s Polish project has been carried out as planned, the semiconductor heavyweight may have to wait until the end of the year to access the funds as a few formalities remain, the report points out. For instance, the Polish government still needs to pass certain legislation and meet requirements set by the European Commission before the deal can be finalized.

Regarding the matter, a spokesperson of Intel said that the company values the Polish government’s ongoing support and partnership as the two parties work together towards the shared goal of a more resilient global semiconductor supply chain, according to The Register.

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• [News] Intel Reportedly Sought Commerce Secretary Raimondo’s Help over U.S. Reliance on TSMC
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(Photo credit: Intel)