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A bold plan to spin out and revive Intel’s foundry business
- Intel's foundry business has negative value and is therefore unsustainable despite its strategic significance for the U.S. national interests and competitiveness.
- Intel's foundry is an asset showing negative worth with unsustainable losses that are dragging cash and lack the scale to compete in advanced manufacturing.
- A spinning-out Intel's foundry operation can be funded via multi-stakeholder investment and strategic partnerships with industry leaders like Taiwan Semiconductor Manufacturing Corp.
- A possible solution to save U.S. advanced semiconductor manufacturing is for Intel to spin out Intel Foundry Services (IFS) as a joint venture and partner with TSMC or Samsung to leverage advanced manufacturing expertise.
- The new entity will reduce Intel's financial burden and create a competitive and independent entity capable of safeguarding U.S. semiconductor leadership and aligns with broader industry and geopolitical imperatives.
- Intel's wafer volumes for its x86 business is in long-term decline compared to the wafer demand for Arm processors dominated by TSMC that is at least tenfold greater.
- Intel's lower wafer volumes result in manufacturing costs that are at best 30% to 35% higher than TSMC's due to Wright's Law and cost challenges.
- IFS produces $19 billion in revenue and posted a 31% revenue decline year-over-year with a $7 billion operating loss in April 2021.
- There are stakeholders needed for the long-term success of a spun-out foundry entity that will take at least more than 10 years to become a viable competitor.
- The venture will require contributions from diverse stakeholders, including major US tech companies such as Amazon, Google, Apple, Microsoft, NVIDIA, private equity firms, and public funds.
- The US government should divest its position over time and give the proceeds back to taxpayers in the form of debt reduction.
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