Intel’s possible rationale for purchasing GlobalFoundries, Inc.
On March 23, 2021, Intel hosted an online event titled Engineering the Future in which CEO Pat Gelsinger outlined his vision for the company. He nicknamed it Intel 2.0. Gelsinger has promised a return to the more competitive days of Intel when the Santa Clara-based company ruled the world of microprocessor chips that run inside Windows personal computers and, eventually, servers.
âWe are bringing back the execution discipline of Intel. I call it Grovian culture that we do what we say we will do. May we have this confidence in our execution. Let our teams be motivated. Whether we said we’re going to do x, we’re going to do 1.1x, every time we commit. It is the Intel culture that we are bringing back.
In its March 23 post, Gelsinger said Intel would spend $ 20 billion on two new chip foundries in Arizona, the first components of an independent division called Intel Foundry Services. IFS foundries can now manufacture chips for any architecture and enterprise, something Intel management wouldn’t even have thought of 10 years ago. This seems to mean that they could potentially create processors with ARM cores in the future.
Intel had an ARM business but sold it in the late 1990s.
At the turn of the century, I spoke with Intel CEO Craig Barrett and asked him why they decided to sell their ARM business. At that time, the demand for more powerful and less power hungry processors was just starting to be felt.
He told me that Intel’s Israeli teams, who were doing much of the R&D for their mobile processors at the time, assured him that Intel would be able to develop their own X86 chips with a demand for power. lower within 2-3 years and the need for a voltage processor would not be necessary. That’s why he sold the ARM business.
Unfortunately, the group creating a low-voltage X86 processor found the task more difficult than expected, and as a result, when Steve Jobs asked Intel to create a processor for the original iPhone around 2004-2005, Intel didn’t was unable to provide one that meets Apple’s needs. .
At the heart of Mr. Gelsinger’s Intel 2.0 strategy is the drive to create faster processors that generate the majority of demand to power next-generation desktops, laptops and servers. The term most used for this is high performance computing. The $ 20 billion investment in new factories will focus exclusively on creating these types of high-speed processors to help Intel regain a more powerful leadership role in the semiconductor industry.
Gelsinger also told us that Intel would be dropping its Immersion lithograph (IT) method of manufacture and undertakes to Extreme ultraviolet process (EUV) promoted by Taiwan Semiconductor Manufacturing Company.
It is clear from Gelsinger’s Proclamation 2.0 that Intel sees the demand for high-speed processors as key to its future and at the time seemed to say that this represented the best way for Intel to grow the business in the future. .
But last Thursday, the WSJ announced that Intel was in talks to buy GlobalFoundries, an AMD spin-off that develops mid-to-low-level processors used in thousands of applications that don’t need high-end processors. range.
I should point out that this report, to date, has not been confirmed and all references to this Intel / GlobalFoundries story refer only to the WSJ article listed above.
Intel’s new high-performance processors will be based on 10nm, 7nm, 5nm, and 2nm processes over time. GlobalFoundries’ fastest process technology starts at 24nm and goes up to over 300nm-400nm as it makes what many call processors for the “rest of the goods” that need some form of computing power.
So, if Intel is committed to driving its future towards high performance computing, why would it care about GlobalFoundries, whose stated vision is to deliver low-end processors to the ârest of the marketâ?
Since this story of Intel’s interest in GlobalFoundries has not been confirmed, I can only speculate as to why Intel might be interested in such an acquisition.
However, a clue of how Intel may think comes from Mr Gelsinger’s speech on March 23 when he pretty much promised to bring Intel back to its glory days and be very competitive again.
He didn’t specifically say, “only competitive in high performance computing.” In fact, at the time of this speech, I noticed that they had given themselves some leeway to possibly expand their market at a time when they were the # 1 supplier of microprocessors not just for PCs, but for hundreds of products requiring any type of computing power.
Intel’s history is ripe with the supply of microcontroller processors, sensors, and other control level computer chips for use in just about any industry in the past. They eventually tightened their focus on PCs and servers, but still provide mid-level processors to meet the needs of various industries.
If they acquire GlobalFoundries, Inc., they would acquire a company with a solid foundation in process technology and equipped to meet the growing need for processors of all types. This may be on Gelsinger’s mind if the goal is to bring Intel back to its glory days as one of the leading suppliers of microprocessors for every industry.
While any deal of this nature will have to go through government scrutiny, Intel may have something in its favor that will help it get US and EU approval quickly. Both the US and the EU are keenly aware of the processor shortages affecting all industries today and know that China is moving quickly to try to fill this void. Although China is behind in establishing factories for high-end computing, my sources tell me that China buys every level of computer manufacturing technology it can get its hands on. Many Chinese semiconductor companies have switched to more sophisticated chip-making technology, leaving behind thousands of machines that can still produce low-end processors, controllers and sensors.
If American and European companies aren’t careful, China could one day carve out the lion’s share of non-high-performance computer processors. GlobalFoundries will always be a force to be reckoned with in this arena, but an alliance or outright takeover by Intel would ensure that together they could beat any Chinese competition in the non-high performance category. Their combined strengths might be able to provide processors at all levels to global companies that might be reluctant to use Chinese processors and associated chips that might include some level of spy or tracking technology.
As I said earlier, the report that Intel is considering acquiring GlobalFoundries has not been confirmed or denied. All references to this are to the original WSJ story listed above. However, if there is any truth to this, I could see Intel’s possible rationale for making a deal like this, which would ensure that Intel would once again become the number one full-service semiconductor company it did. was in his glory days.