Intel CEO Rethinks Chip Manufacturing Plans in Bid to Win Apple, Nvidia

The CEO wanted to concentrate more resources on 14A, a next-generation chipmaking process where Intel hopes to outperform TSMC.

Intel’s new CEO is considering a big change to its contract manufacturing division to attract two crucial clients, a potentially expensive shift from his predecessor’s plan.

Sources claim that the new strategy, which Intel refers to as its “foundry” business, will cease selling specific chipmaking technology that the company had long developed to external clients.

Since taking over the company in March, CEO Lip-Bu Tan has acted swiftly to reduce costs and find a new approach to turn around the struggling US chipmaker. Anonymous sources claim that he voiced concerns that 18A, a manufacturing process its former CEO Pat Gelsinger had bet heavily on, was losing its appeal to new customers.

Intel would take a write-off loss if it set aside external sales of 18A and its variation 18A-P, which would incur billions of dollars for the company to develop. Industry analysts claim that such a charge would result in a loss of millions of dollars.

Intel declined to comment regarding such “market speculation.”

It stated that Intel has long been 18A’s top customer, and it plans to increase manufacturing of its “Panther Lake” laptop chips, which it described as the most advanced processors it has ever created and designed in the United States.

Convincing external clients to use Intel’s facilities is crucial for its future. As manufacturing 18A is getting delayed, rival TSMC is trying to fasten its production with N2 technology.  

Sources claim that the CEO initially wanted to concentrate more resources on 14A, a next-generation chipmaking process where Intel hopes to outperform TSMC. This move could be a way to attract Apple and Nvidia, who currently pay TSMC for their chips.

According to sources, Tan wanted the company to lay out options for discussion with the board members, including whether to stop marketing 18A to its new customers.

The source stated that the board will not decide anything about 18A until later autumn due to the complexity of the issue and the enormous amount of money at stake.

Lip-Bu stated that they are on the pathway to building trust among customers and improving their financial situation.

It was Intel’s first year without profit since 1986. It reported a net loss of US$18.8 billion for 2024.

The CEO’s discussions indicate that it is high-risk and costly to move the US chipmaker back on track. Like Gelsinger, Tan took over the business that was losing its competitiveness and falling behind on crucial technological trends of the past two decades: artificial intelligence (AI) and mobile computing.

Now, Intel is customizing 14A to meet the most crucial client needs.

The company plans to produce 18A in large quantities later this year using its internal chips, which will arrive before external clients’ orders. According to sources, Intel may continue with its current plan for 18A, and it is uncertain if they can deliver 14A in time to secure significant contracts.

Tan’s overall strategy is still in the beginner stages. He has updated his leadership team, brought new engineering talent, and worked to reduce what he saw as bloated and slow-moving middle management.

One of his significant decisions is to stop selling 18A to foundry clients.

The new 18A manufacturing process uses a new transistor and a novel way of supplying energy to chips. They planned these improvements to let Intel match or exceed TSMC’s capabilities.

According to some industry analysts, the 18A process is similar to TSMC’s so-called N3 manufacturing technique, which started high-volume production in late 2022.

If Intel follows Tan’s lead, the company would concentrate on its foundry clients, design partners, and new clients on 14A in the hopes of competing with TSMC.