Intel's Strategic Shift Causes Major Changes in the Foundry Industry

Foundry-Inclusive Manufacturing Division Enhances Independence
Intel Counts Internal Semiconductor Production as Foundry Revenue
Foundry Sales Increase Establishes Three-Strong Structure with TSMC and Samsung

Intel is restructuring its business model to enhance its foundry competitiveness, making it similar to Samsung Electronics. It will create a manufacturing division with its own accounting functions to boost its foundry business competitiveness.

On the 21st (local time), Intel held a webinar explaining the 'Internal Foundry' model to analysts and investors. Intel had already announced the introduction of the internal foundry last October. The company plans to consolidate its ▲manufacturing ▲technology development ▲foundry (IFS) businesses into a single manufacturing division. This division will operate as an independent organization managing its own profit and loss.

Samsung Electronics has an internal foundry division that produces and supplies semiconductors ordered externally. This division is an independent organization with its own HR and accounting functions. When the MX division, which makes smartphones, needs communication chips, it orders them from the foundry division. The foundry division produces goods and earns revenue from both internal Samsung orders and external orders. Intel's manufacturing division is similar in nature to Samsung Electronics' foundry division.

Intel orders its flagship products, such as central processing units (CPUs), from the manufacturing division. Going forward, the production costs will be recorded as sales revenue for the manufacturing division. This is expected to be fully implemented starting from the first quarter of next year.

The semiconductor industry is paying close attention to whether changes in Intel's foundry revenue recognition method will bring shifts in the foundry market. Combining Intel's internal production and external orders will significantly increase its foundry revenue. In this case, Intel's foundry revenue would surpass Samsung Electronics, the industry's second-largest player. David Zinsner, Intel's Chief Financial Officer (CFO), stated, "In 2024, we expect to record manufacturing revenue exceeding $20 billion based on internal volumes, becoming the second-largest player." Last year, Intel's foundry revenue was only $768 million.

Until now, the foundry market has been dominated by TSMC, with Samsung Electronics trailing behind. TSMC recorded revenue of $75.799 billion last year. As of the first quarter of this year, its market share exceeds 60%. Samsung Electronics holds the second position with a market share in the 12% range. Its revenue last year was $21.891 billion.

Intel has set a goal to become the second-largest foundry company by 2030. Although there were doubts about the feasibility due to its technological gap compared to the leading company, Intel has recently taken active steps to expand its foundry competitiveness. It has announced investment plans centered on the U.S. and Europe, aiming to increase production capacity (capability). Recently, it also announced the introduction of an innovative technology called PowerVia (relocation of semiconductor wiring) in the sub-2 nanometer (nm; 1 nm = one billionth of a meter) process to be introduced next year.

Kim Yang-peng, a senior researcher at the Korea Institute for Industrial Economics & Trade, said, "Intel is a strong player in CPUs and has had significant influence in the global semiconductor market, even recording the highest sales at times. Securing foundry sales internally is a natural step."

However, he added, "Rather than increasing sales through internal transactions, securing additional external clients will be more important going forward. This is a challenge both Samsung Electronics and Intel face."

This content was produced with the assistance of AI translation services.