Intel Outsourcing More Arrow Lake Chip Orders to TSMC

According to reports, Intel plans to outsource more Arrow Lake CPU orders to TSMC due to a loss of confidence in its own foundry division (IFS).

Intel's business performance has been less than ideal, not only in the consumer space but also in areas such as data centers and artificial intelligence (AI). The company has failed to fully leverage its resources, and now it is turning to TSMC for key orders, as TSMC has a significant edge in semiconductor manufacturing quality. A recent report states that Intel has increased its outsourcing of Lunar Lake and Arrow Lake SKUs to TSMC, as the company strives to maintain its leadership in the CPU market.

The Intel Arrow Lake “Core Ultra 200” series SKUs are critical, marking the company's first decision to select an external foundry. The reason is simple: Intel's own foundry has underperformed, and with Intel aiming to compete fiercely with companies like AMD, which already leverages TSMC's capabilities, this move is seen as necessary. Intel's unique tile configuration and use of Foveros 3D packaging technology suggest that the company has not been hindered by this transition, but the shift to TSMC highlights the lack of competitiveness in Intel's own foundry.

The increased outsourcing to TSMC, combined with the underperformance of Intel's own foundry, has raised questions about Intel's plans for its chip business. On the surface, it now appears that Intel has become one of TSMC's major clients, especially as TSMC's 3nm process is expected to be integrated into Intel's next-generation Falcon Shores AI GPUs. Given Intel's determination to collaborate extensively with TSMC, a likely next step could be selling off its manufacturing division.