Intel will manage chip manufacturing division as a separate business unit

Intel announces a reorganization of its chip manufacturing division. This means that the company’s production branch will operate as a kind of separate unit. This should, among other things, provide more flexibility to make chips for other companies.

With the change, Intel’s chip manufacturing business will become its own business unit with a profit and loss account, the chip maker writes. Currently, the production activities are still part of the Intel divisions that work on products. Under the new corporate structure, Intel’s product and manufacturing units will work together “at an arm’s length.” “Intel’s product teams and manufacturing teams will work together in a manner similar to the way fabless companies collaborate with third-party foundries,” the chipmaker said.

The move should, among other things, make it easier to reserve production capacity and enter into supply agreements with external companies that want their chips made by Intel. It also separates the data and intellectual property of external customers from Intel’s own product teams. In addition, this separation of Intel’s chip design and production work should reduce costs.

The teams that design Intel’s own products will also have “the flexibility to work with other third-party chip makers” under the new business setup. Intel says it already produces twenty percent of its products at external foundries. The company’s Arc GPUs, for example, are made using the 6nm process of market leader TSMC.

Intel says it wants to become the second largest external foundry by 2030. The chipmaker expects to achieve that next year with its new business model, with production turnover of $20 billion. By comparison, TSMC posted revenues of $75 billion last year and Samsung’s foundry division currently has annual revenues of about $20 billion. At the same time, Intel is not providing a clear schedule for when it plans to start scaling up its foundry operations.

CEO Pat Gelsinger already announced in 2021 that Intel will produce chips for other companies. The company does this as part of its IDM 2.0 strategy. The company is currently a fully integrated device manufacturer, or an IDM. That is a company that produces its own chips. This should change with IDM 2.0 and the establishment of Intel Foundry Services. In addition to its own chips, the manufacturer will also make chips for others. This means that the company will partly function as an external foundry, just like TSMC.