Intel will allegedly place $4 billion worth of orders with TSMC in 2024 to fab 3nm CPU tiles, per a report from semiconductor analyst Andrew Lu (via eeNews). 2025 will also see a large number of Intel chips produced at TSMC, with orders totaling $10 billion. Lunar Lake is allegedly Intel's first processor to have its CPU cores fabbed at an external foundry, and Lu believes Intel will become increasingly dependent on TSMC in the future.
TSMC's 3nm node is the company's latest, and right now, it's primarily known for being the process that powers Apple's latest M3 and A17 processors. However, the analyst claims Intel will become TSMC's second-largest 3nm customer, displacing AMD, while Apple remains the largest. By the end of 2024, the analyst claims Intel will have 15,000 3nm wafers per month coming in from TSMC, and that figure will increase to 30,000 in 2025.
Those figures might seem strange considering the order values: 15,000 wafers per month in 2024 is worth $14 billion, while double the wafers would only be worth $10 billion in 2025. Assuming the figures are indeed accurate, it could be down to declining prices for 3nm wafers over time. Nodes tend to get cheaper over time due to higher yields stemming from process maturity, so Intel's ability to order more for less might not be contradictory.
Lu claims that there's no going back for Intel and that the company will rely heavily on TSMC's foundries in the future. There are apparently many financial and economic benefits for Intel to work with TSMC, but perhaps the most obvious advantage is increased production capacity. Intel's production capabilities are massive but perhaps not massive enough to support the company's CPUs, GPUs, and third-party manufacturing. That's why Intel has outsourced lower-value portions of its production to external foundries for years.
Intel's increased reliance on TSMC isn't new, though. Arc Alchemist GPUs are fabbed at TSMC, Ponte Vecchio uses TSMC-made chips, and Meteor Lake employs TSMC's 5nm and 6nm nodes for three of its four tiles. It's also rumored that upcoming Battlemage and Celestial GPUs will be fabbed at TSMC, and upcoming tile CPUs will presumably continue using at least some TSMC-fabbed tiles.
Intel has outsourced part of its production to external foundries for decades, and the benefits outweigh the negatives. Additionally, the company is in a better technological position than when it struggled to get 10nm chips out the door. If Intel had allowed itself to produce its CPUs at TSMC back then, then perhaps it wouldn't have lost as much market share to AMD as it has in recent years.
