Semiconductor foundry "Waterloo"! Intel will fully outsource processes below 3 nanometers to Taiwan Semiconductor, planning to lay off 15% of its global workforce

In deep trouble, Intel has received more bad news.

On September 9th, according to the Taiwan Business Times, Intel's semiconductor foundry business development has been hindered. It is reported that they have fully entrusted the production processes of 3 nanometers and below to TSMC and are implementing a global workforce reduction plan of 15%. Industry insiders revealed that Intel's layoffs are mainly targeting the foundry business, but the Taiwan branch has not been affected in order to maintain the production business of the Taiwanese chip factory.

Intel had been committed to building a world-class foundry business. CEO Pat Gelsinger once viewed the foundry business as a key to restoring Intel's position among chip manufacturers and hoped it would eventually compete with TSMC.

However, this strategy has not been successful and has instead resulted in huge losses. Documents submitted by Intel to the U.S. Securities and Exchange Commission (SEC) in April this year showed that the independent chip manufacturing division, "Intel Foundry," is expected to achieve revenue of $18.9 billion in 2023, a 31% year-on-year decrease, with an operating loss of $7 billion. The latest quarterly report shows that the foundry business losses have expanded to $2.8 billion, with an operating profit margin of -65.5%.

With TSMC sprinting ahead in advanced processes, the foundry market is now showing a "winner takes all" situation.

At the end of last month, media reports stated that Intel is considering various possibilities, including spinning off its chip design and manufacturing business, as well as shutting down some factory projects. In response, Morgan Stanley analysts believe that this move is favorable for TSMC:

If Intel decides to further reduce capital expenditures or halt new wafer fabs, this will directly impact the capacity of its external foundries. Considering the current global shortage of advanced processes, such actions may further tilt the market towards TSMC, especially given TSMC's expansion of its business layout.

Once a leader in technology trends, Intel has missed opportunities in emerging areas such as mobile internet and AI due to strategic mistakes, and is being left behind by the times.

Since the beginning of this year, Intel's stock price has plummeted by 60%, falling out of the top ten global chip manufacturers and becoming the second worst-performing company in the Philadelphia Semiconductor Index, in stark contrast to NVIDIA. By 2024, NVIDIA's revenue is expected to be twice that of Intel.