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In a nutshell: Intel's fledgling foundry business, Intel Foundry Services (IFS), has struggled to gain significant traction since its launch in 2021. While it's secured customers like Cisco and AWS, bigger clients and chip orders are still out of reach. Now, the company has reportedly reached out to Samsung Electronics to explore forming a strategic foundry alliance.
According to a report by the Korean Maeil Business Newspaper, a senior Intel executive recently requested a high-level summit between the company and Samsung. The goal is for Intel CEO Pat Gelsinger to meet directly with Samsung Electronics Chairman Lee Jae-yong to discuss comprehensive cooperation plans merging their foundry operations.
If such an alliance comes to fruition, the synergies could be significant. The report says that the two companies may collaborate on process tech exchanges, shared production equipment utilization, and joint R&D initiatives. They could combine strengths like Samsung's advanced 3nm GAA (Gate-All-Around) technology for enhanced efficiency with Intel's mastery in packaging via Foveros chip stacking and PowerVia power optimization.
While there's no official confirmation as of yet, the report doesn't come as a surprise. In Q2 2024, data from TrendForce showed TSMC dominated the foundry market with 62.3% share, while Samsung trailed far behind at 11.5%.
Moreover, the firms' geographic footprints are complementary. Samsung operates fabs in the US, South Korea, and China, while Intel has facilities across the US and Ireland. With tightening semiconductor export controls in the US and EU, the report notes that producing chips regionally is becoming increasingly important.
Beyond geography, the benefits for Samsung could include finally solving its foundry yield rate woes – to a degree. A report recently highlighted how the company's yield for processes below 3nm currently stands below 50 percent, while its GAA technology yield is reportedly as low as 10 to 20 percent.
For Intel, it could represent a foundry comeback after alienating major customers with repeated delays in advancing to newer chip manufacturing nodes. Team Blue's foundry business is facing challenges, and the company even split the division in September, with the fabrication operation confirmed to run as an independent subsidiary.
TSMC has captured virtually all industry attention and most major orders, leaving scant foundry market share for Intel or Samsung to compete over. A collaboration between its competitors could dramatically reshape the foundry landscape and intensify competition.