[avmich]

> The TL;DR is that Intel has always been a vertically integrated shop (meaning that they usually fab and design their own chips), and that is starting to bite them because pure-play foundries are improving their tech at a faster rate.

Are you saying that vertically integrated companies are inherently disadvantaged because pure-play companies have a bigger list of orders and can spend more on evolving technology?

There is advantage to be vertically integrated, namely a better global optimization across domains, like between design and manufacturing. Would be interesting to know why it's not enough - if it's always not enough. If not always, then this particular case needs more reasons.

[ethbr0]

The balance likely comes down to volume. Specifically, total global chip sales.

If Intel builds Intel (I believe their contract fabing is a rounding error?), then they're directly tied to Intel chip sales.

This sets up a potential death spiral. Intel misses a process node deadline, Intel's products are uncompetitive, Intel sales decrease, less demand for Intel fab, less money for Intel fab improvement.

Intel can temporarily paper over this by shifting money from other areas of the company, but it's not a good path to be on.

Conversely, as you might expect, if Intel sales are increasing then the opposite, virtuous cycle holds.

So essentially, Intel's fortune is tied to the Intel_sales : (global_sales / number_of_leading_edge_non-Intel_fabs) ratio.

And with regards to that, two huge things happened in the marketplace recently: (1) mobile chip sales explosion, (2) GlobalFoundries exiting leading process race.

If Intel hadn't been screwed by a process engineering miss, longer term trends would still have hit them hard.

[CountSessine]

This is the case with every foundry, though. It’s the reason GloFo isn’t competitive anymore, for example. What’s more interesting is the physics reason that they tripped up the last generation - what did TSMC do right that Intel did wrong? What bets were made? Which ones paid off?

[Pet_Ant]

I believe the issue was that Intel was leaning harder on EUV trying to make it and burying the competition instead of a more cautious approach by TSMC. Zen 3 is finally using some EUV layers whereas I believe Intel already wanted to use EUV heavily in their "10"nm process.

[wmf]

Nope, Intel 10nm does not use EUV. Zen 3 is made on TSMC N7 (not N7+ as rumored) which also does not use EUV.

[ethbr0]

I feel like the business models are slightly different when you're a contract foundry vs integrated though.

The latter depends on your market share. The former only depends on the total market.

[jandrese]

I think the idea is that the open fab shops just have a hell of a lot more work than Intel and greater economies of scale. Making zillions of mobile chips means big money even if the profit margin per chip is smaller. This in turn means more R&D and eventually they overtake the company that only fabs their own desktop processors and chipsets.

In the long run Intel screwed themselves over by not leasing out fab time to other companies. They put themselves in a niche in an industry that is naturally dominated by the largest player. And it's extra embarrassing that they did so because they knew very well how important it was to be the biggest--they were for a few decades!

Maybe Intel could have held on longer if they had a successful mobile chip to stuff into billions of smartphones, but their mobile efforts were short lived and seemed to be treated with disdain by the management. The first product kind of sucked and instead of sticking with it and improving they just threw in the towel, both on mobile processor and the baseband chip. An embarrassing misstep for a company as big as Intel.

[trhway]

>In the long run Intel screwed themselves over by not leasing out fab time to other companies.

sounds like Google who also treated their cloud/fabric computing as a competitive advantage to be kept to themselves and as result they missed the cloud business.

>their mobile efforts were short lived and seemed to be treated with disdain by the management.

classic. Low margin high volume future usually can't survive in the shadow of the high margin cash cow of yesterday that is still being milked.

[simonh]

I think the point is if TSMC develops a new node they will find customers for it, and they compete with other foundries on node.

With intel their foundries only have internal customers, who can only go to their internal foundries. There’s no competitive pressure on the foundries, and if they are ready early that’s wasted capacity. So so capacity and technology planning is based on a common road map to meet the needs of their slowest (er, I mean only) customer.