Intel signs Microsoft as foundry customer, says on track to overtake TSMC From Reuters

By Stephen Nellis and Max A. Cherney

(Reuters) -Intel said on Wednesday that Microsoft (NASDAQ:) plans to use its services to produce a custom computer chip and that the company expects to meet its 2025 internal deadline to get ahead of its biggest rival, Taiwan Semiconductor Manufacturing Co. producing chips.

The chipmaker also provided new details on how it plans to maintain an edge over TSMC in 2026 and beyond.

Intel (NASDAQ:) made the disclosures at an event in San Jose, California, at the first technology conference for Intel Foundry, the contract manufacturing operation created to compete with TSMC.

Intel says it plans to take back the task of producing the world’s fastest chips from TSMC later this year with what it calls Intel 18A manufacturing technology and extend that lead through 2026 with new technology called Intel 14A.

He said Microsoft will use its 18A technology to make an undisclosed chip and that he now expects $15 billion in orders from the foundry, up from the $10 billion the company previously told investors to expect.

The news of the 14A technology is the first time the Silicon Valley company has provided details about its plans beyond 2025. That’s the deadline Intel CEO Pat Gelsinger set for himself to regain his chipmaking crown when he took the reins three years ago.

For decades, Intel made chips only for itself and used its manufacturing leadership to create a cycle in which it produced chips with industry-leading performance and charged a premium for them. Those margins, in turn, helped finance manufacturing progress. But as Intel lost manufacturing leadership, its chips became less competitive and margins fell, weakening sources of financing for a production revival.

Now, Intel is counting on potentially billions of dollars in U.S. government subsidies and deals from outside customers to help it get back on track.

Some customers will hopefully be attracted by its long history of operating cutting-edge factories across multiple continents, particularly those concerned about TSMC’s practice of keeping its most advanced factories clustered in Taiwan.

“It’s a selling proposition that’s resonating right now. People want it,” Stu Pann, the executive who oversees Intel Foundry, said of the company’s geographic diversity.

Intel says it has four “large” customers signed up for its 18A manufacturing technology, but has not yet named them. It is unclear whether Microsoft is among these financially significant customers.

Intel said Wednesday that it is working with Arm Holdings (NASDAQ:) to facilitate the production of chips with Arm technologies in its factories. Intel also said it will work with the University of California Berkeley and the University of Michigan to give students access to its 18A manufacturing technology.

Intel also has special technology that analysts say will be useful in speeding up power-hungry AI chips. Nvidia (NASDAQ:), a leader in the AI ​​chip market, said it is evaluating Intel’s manufacturing technology, but the two companies have not announced a deal.

Intel’s effort to attract external customers “is the key to the turnaround,” said Ben Bajarin, chief executive of consultancy Creative Strategies.

“Unfortunately, it’s an unanswered question, because this is a two- or three-year journey before you have any idea that you know it’s working.”