Intel's Moonshot with Lunar Lake: A Strategic Partnership with TSMC

This is a first for Intel, which has always insisted on making its own chips on its own advanced process nodes, so it is a dramatic step for the company. Intel’s Lunar Lake is the flagship CPU of the next generation of personal computers. Announced in 2023, it will be the first of Intel’s new generation of chips to be built by TSMC, with future Intel processors – as many as four or five – using TSMC process technology. Intel’s CEO, Pat Gelsinger, is not a technologist; he is a pragmatic businessman. One of his main initiatives is to leverage the strength of the global semiconductor industry to take care of Intel’s manufacturing. Intel will pursue its ambitions in CPUs, GPUs, FPGAs and other semiconductors, but will leave the heavy lifting of manufacturing to the likes of TSMC, Samsung and others. This is the outcome of a long saga that began decades ago with Steve Jobs’ frustration with IBM and that culminated in Google and other companies breaking faith with TSMC and Samsung and building their own factories. The current state of play is a mosaic of big and small companies, some with advanced process technology and some without, all competing to be competitive and to make money.

A Leap into Uncharted Territories: Intel's Move to TSMC

Intel has always been proud of its ability to manufacture its processors in-house, and this is why the Lunar Lake project is such a significant development. The four tiles that make up Lunar Lake’s architecture – its compute tile and its controller tile – are both manufactured by TSMC. This is not a decision that Intel has taken lightly. It recognises that it has been beaten by TSMC, and it also recognises the benefits this partnership can bring.

Why Did Intel Choose TSMC for Lunar Lake?

The choice by Intel to partner with TSMC for the most important product in its history creates a number of interesting questions. Did Intel see it as an opportunity to learn from an industry leader such as TSMC? Or was it a dawning awareness that, especially at this present moment in time, Intel no longer had an inherent technological advantage? As the CEO of Intel, Pat Gelsinger, has noted, this pivot to TSMC offered Intel a chance to have the ‘right technology at that point in time’. If technology is what eventually drives our economic growth, then Intel’s engagement with TSMC ensures that Intel can avail itself of the very same leading-edge manufacturing capabilities that Gelsinger himself deemed, right from the start, to have been ‘a good choice’.

The Strategic Implications of Intel's Move

This is not a move about a single product by Intel, but rather a deeper strategic alignment in the semiconductor industry. Intel’s own foundry ambitions, as demonstrated by its recent announcement to build five process nodes in four years, and even more significantly, its own hefty government-backed investment, is now seemingly complemented by the partnership with TSMC, and not contradicted. To this end, one can expect to see many more such strategic partnerships to shape the innovation and efficiency of the semiconductor industry in the coming years.

The Path Forward: From Lunar Lake to Panther Lake

Beyond that, his comments on future Intel roadmaps, focusing on the next transition to Panther Lake, suggest that this kind of internal manufacturing integration will continue, with Intel’s facilities almost exclusively used for its next generation, Panther Lake, built using the 18A process. Intel will definitely continue to take advantage of its own cutting-edge internal advances, but if it does find those expensive chips advantageous for the specifics of more devices, it will look for strategic partners to benefit itself and its customers.

The Impact on the Semiconductor Landscape

Intel’s partnership with TSMC for Lunar Lake also marks the next step in this brave new world, both practically – designing processors becomes cheaper when you’re not also investing in a new factory – and philosophically, with the semiconductor industry’s titans showing a willingness to work together for broader technological advancement that could portend even more cooperative strategies to come.

Understanding the Move: Strategic Flexibility in a Competitive Era

In another signal of Intel’s strategic agility, de Dadian noted that Intel would be ‘collaborating with TSMC to produce the chip manufacturing for the Lunar Lake.’ Intel’s ‘leading-edge’ chip manufacturing will be, at least in part, outsourced to TSMC. So Intel has managed to simultaneously secure short-term product expansion while safeguarding long-term manufacturing development. Intel’s strategic approach might become a model for other enterprises, signalling the importance of staying nimble by maintaining interdependence in a fast-paced technological environment.

Intel’s move to take the manufacture of its Lunar Lake processors to TSMC illustrates the potential for the semiconductor industry to be transformed into something new, building upon the growing need for outsourcing and for greater cooperation and flexibility in the face of ferocious competition and a desperate race for technological progress. We may only be at the very beginning of a semiconductor-industry future built on such alliances. But they could become increasingly fundamental to progress, not just in overcoming immediate hurdles, but in helping develop the next turn of the digitisation screw.

Jun 06, 2024
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