Update 9/21/21 5:30am PT: Intel reached out to clarify Raja's response, which was misquoted in the referenced article. We have amended the text accordingly:
Raja Koduri, Intel's Senior Vice President and General Manager of the Accelerated Computing Systems and Graphics (AXG) Group, recently shed some light on its decision to contract TSMC to manufacture its ARC GPUs on its 6nm process.
"It is necessary to first determine the process that can be assumed at the start of design," said Raja. "Other features, such as how much operating frequency can be used are also important factors. Cost is also an issue. These three, that is, the cost-performance-capacity, is taken into consideration when deciding which process to use. "
Intel concluded that the first product, Alchemist, happened to find the best balance on TSMC's N6 node. And of course, it can't be understated that due to Intel's series of process delays, competing with AMD or NVIDIA with a new product on a not-leading-edge node could certainly bite into the performance potential for ARC.
The semiconductor manufacturing market has been hit repeatedly over the last 18 months with supply issues, stemming mostly from the complexity of its long supply chain. However, Intel seems to have escaped relatively unscathed, mostly owing to its vertical strategy. Intel designs and manufactures its CPUs fully in-house, giving it more flexibility than so-called "fabless" manufacturers (such as AMD) to prioritize its manufacturing lines and adapt to shifting market conditions.
The complex equation to choose a certain node also encompasses other aspects. For example, the CPU cores for AMD's Ryzen 7 5800X CPU (8-cores, 16-threads) feature a roughly 80.7 mm² surface area on TSMC's 7 nm process for a total of 4.15 billion transistors. AMD's top GPU offering, the RX 6900XT, manufactured on the same process, absolutely dwarfs that at more than six times the die size (520 mm²) and 26.8 billion transistors. In other words, GPUs are in another league, in general, when it comes to silicon manufacturing simply because they are larger, resulting in fewer chips per wafer.
Of course, opting for TSMC also means there's less capacity for its rivals to produce GPUs and CPUs on the best manufacturing nodes available, as well. So moving GPU production to TSMC means Intel will be able to produce more devices in a silicon-hungry market while simultaneously assuring its competition can't make as many chips as they could sell. That's one way to beat the competition.