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DigiTimes: Intel To Outsource 14nm Chips To TSMC (Updated)

UPDATE 10:45 PT 9/7/2018: Intel responded to our queries with the following nebulous statement (which does not deny outsourcing): “In response to the stronger than expected demand environment, we are continuing to invest in Intel’s 14 nm manufacturing capacity.”

We also spoke with representatives that indicated that Intel continues to use external foundries for some products, but would not elaborate on specific partners or products.

Original Coverage --

DigiTimes is reporting that Intel intends to outsource 14nm chipsets and "several other" 300-series processors, possibly meaning the Coffee Lake chips, to TSMC to aid in production. The news comes as details of Intel's struggles with 14nm chip production surface from multiple sources. The shortages largely stem from the company's delayed 10nm production, which has pushed unexpected demand back to its 14nm manufacturing lines. 

It seems counter-intuitive for Intel to outsource production of its Coffee Lake processors, especially due to design complexity and trade secrets, so we are skeptical. Outsourcing the H310 chipset, which has been plagued by poor availability for months, seems more plausible.

These relatively simple chips would seemingly be easier to port over to TSMCs foundries, albeit on a different node, especially (as DigiTimes notes) given the company's partnership with Intel on other products, such as the SoFIA SoC's and Stratix FPGAs. Currently the 14nm chipsets are clogging Intel's 14nm foundries: in most cases the company has to create one chipset for each processor, so easing that production load would free Intel up to produce more 14nm Coffee Lake processors.

The signs of an impending shortage of Intel's 14nm chips became clear when the company announced during its latest earnings call that "Our biggest challenge in the second half [of 2018] will be meeting additional demand, and we are working intently with our customers and our factories to be prepared so we are not constraining our customers' growth."

But signs of Intel's 14nm struggles had emerged even before the company publicly acknowledged the issues. Intel's 14nm H310 chipsets have been in short supply, or simply unavailable, since May 2018. Several Taiwanese OEMs, including Acer's CEO Jason Chen, stepped forward last week and said that 14nm CPU shortages are already impacting their supply chains.

We followed up last week with pricing and availability analysis and found that many of Intel's non-K SKUs, meaning the cheaper models that generate less margin, are experiencing a sharp rise in pricing. Intel's Core i7-8700K is also popping in and out of stock at major retailers, suggesting that the company is having a hard time meeting demand.

Over the weekend, SemiAccurate unveiled purportedly internal HPE documents that highlight the severity of the shortage. The documents, which pertain to Intel's data center Xeon processors, instruct the company's sales representatives to 'steer demand' from unavailable models to other Xeon products that are available, or to recommend AMD's EPYC processors.

  • jpe1701
    Recommend Epyc? I love it. It's great to see competition again.
    Reply
  • hannibal
    The problem is that if there is production capasity problem. It means that the prices of all products comes upp... as there were production capasity problem in memory department, no it goes to cpu and gpu... and only can means higher prices to us.
    Reply
  • stdragon
    21307986 said:
    Recommend Epyc? I love it. It's great to see competition again.

    Going to be real interesting how that's handled. With any virtualization technology (VMWare, HyperV, Citrix...etc), you can NOT mix AMD with Intel in a single virtualization host cluster. You can however create AMD and Intel clusters with like CPUs, but even then the CPU generation feature-set will be to the lowest common denominator. This is important when having to do things like vMotion (live migration of a running VM from one host to another).
    Reply
  • littleleo
    The Intel CPU shortage is worse then the public realizes yet. Prices have been skyrocketing on popular models and lots of shortages on Intel are popping up. Expect AMD models to start going up in price and going short as SI have to go AMD to provide systems to their customers. The Intel shortages are expected to last until at least Q1 2019.
    Reply
  • JQB45
    What is causing the shortages? Lack of capacity to meet demand? Or something more serious?
    Reply
  • Kaz_2_
    Intel has limited fabs , they need to convert some 14nm to 10nm. the problem is 10nm isnt working to bring up capacity. reducing 14nm capacity to bring more 10nm capacity. in the end its big lose to Intel. They simply dont have the capacity to fulfil everyone therefore AMD will take over the remaining business. AMD is on their way up higher
    Reply
  • jasonelmore
    Intel finally gave us 6 core consumer CPU's but they did as they were transitioning to 10nm. What we seeing is a lot of consumer pimped up demand when Intel can't handle the demand due to the 10nm transition. So far Intel hasn't shown it can make a 4+ core chip on 10nm in any meaningful volume. EUV will solve the scaling problem for the time being if they can actually get it working.
    Reply
  • Giroro
    A company like Intel can't just easily switch over to another fab. They have to wait in line behind work that has already been scheduled, and when they finally get in the silicon itself takes a long time (on the scale of a month) to produce.

    I don't think this is true, but if it were, TSMC would be maybe 6 months away from delivering the first shipment (but probably more like a year). It doesn't make sense for Intel to increase 14nm production for Q2 2019 ... unless Intel has decided it's 10nm is never going to happen.
    Reply
  • InvalidError
    21308868 said:
    It doesn't make sense for Intel to increase 14nm production for Q2 2019 ... unless Intel has decided it's 10nm is never going to happen.
    It could make sense if you were still manufacturing a significant volume of 22nm chipsets and other support functions that don't require cutting-edge process, want to shut down those 22nm plants for upgrade to 7/10nm but don't have enough spare 10/14nm capacity to accommodate the transition.

    Chipsets and other support chips will stay on 14-22nm for many more years, especially if 10nm and beyond continue being more challenging than expected.
    Reply
  • jimmysmitty
    21308218 said:
    21307986 said:
    Recommend Epyc? I love it. It's great to see competition again.

    Going to be real interesting how that's handled. With any virtualization technology (VMWare, HyperV, Citrix...etc), you can NOT mix AMD with Intel in a single virtualization host cluster. You can however create AMD and Intel clusters with like CPUs, but even then the CPU generation feature-set will be to the lowest common denominator. This is important when having to do things like vMotion (live migration of a running VM from one host to another).

    Its a big reason why even with a good chip like Epyc AMD is not going to be taking a ton of the market share like some people want. It would be more gradual if at all since those bigger companies are not willing to invest that much to change over for some better performance.
    Reply