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Intel vows to take back the crown of innovation, changing the standard

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(Bloomberg) — Intel, which is playing a catch-up role in semiconductor technology following losing its longstanding dominance, has pledged to become the industry leader again in 2025 by rethinking some of the fundamentals of how chips are made, and has signed off on rival Qualcomm Inc. as a manufacturing customer.

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Santa Clara, California-based Intel aims to ramp up innovation and change the approach used to measure progress in chip production, arguing that the current system gives competitors Taiwan Semiconductor Manufacturing Co. And Samsung Electronics Co. is an unfair advantage.

CEO Pat Gelsinger — an Intel veteran who rejoined the business following a stint at VMware — took over the company in February on a mission to restore the chip industry’s previous glory. Under its predecessors, Intel suffered years of delays in bringing unused types of manufacturing technologies online. This has cost market share and even prompted some customers to design their own chips.

For investors, Monday’s announcement was not particularly reassuring, according to Wedbush Securities analyst Matt Bryson. He said it was a reminder of the time and money it would take to plan a comeback.

“There’s no guarantee,” Bryson said. Even based on Intel’s own schedule, it will take years for the company to catch up with TSMC.

Intel shares fell 2% in extended trading on Monday, following jumping to $54.31 in New York. The stock is up about 9% this year.

Intel is still the largest chip maker, but it has lost its technological edge to the so-called foundries in the industry, TSMC and Samsung. These companies handle other companies’ semiconductor production, allowing Intel’s competitors to take advantage of more advanced facilities without having to run their own factories.

Industry measures craftsmanship by the size of some microscopic features of chips. The smaller the number – measured in nanometers or billionths of a metre – the more advanced the design. TSMC is located at 5 nm and currently converts to 3 nm. Intel runs on 10nm and moves to 7.

But Intel doesn’t think this is a true reflection of its relative capabilities, and so the company is changing the terminology. What was previously identified as an advanced version of the 10nm will now be called “Intel 7.” And what the company would call 7nm would be called “Intel 4.”

Bryson Wedbush does not see the unused standard as particularly necessary.

“The people you sell to have to understand very well that there are differences,” he said.

Qualcomm deal

Intel said that a following node it will call 20A, which will debut in 2024, will be used by Qualcomm. Qualcomm, the largest maker of smartphone chips, has in the former used TSMC and Samsung to build its products.

Qualcomm has a complicated relationship with Intel: The San Diego-based company’s nascent effort to burst into the PC market with laptop processors competes directly with Intel’s core business.

The Intel 20A node was named to represent the industry’s transition beyond the nanometer era to measurements made in angstroms, or hundreds of millionths of a centimeter. The nanometer number, a longstanding industry standard, was originally a way to measure the transistors that make up processors.

Now, Intel customers want it to use a numbering system that more accurately reflects the relative strength of its technology, according to Sanjay Natarajan, vice president of Intel. He said the numbers competitors are using are more about marketing.

Amazon Agreement

The company also announced progress on some fundamentals of chip manufacturing that it said would aid drive its offerings. This includes a unused transistor design, a distinct way of connecting and powering them, and chip-encapsulation innovations that will make products even smaller.

Intel said Monday that Inc.’s AWS cloud computing unit. , an Intel chip customer that has begun designing its own chips, will use Intel to package its inner processors.

Transistors are the microscopic switches that donate chips their primary function. A modern Intel microprocessor has billions of them crammed into areas the size of a thumbnail. Packaging is the process by which the silicon and electronics of a chip are encapsulated in plastic with the connectors needed to join it to the rest of the device of which it is a part.

(Updates with analyst comment in fifth paragraph.)

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