Intel’s Foundry Goal: Next-Gen Systems?

The PC market declined 8% last year, according to IHS. In its first-quarter earnings report, released in April, Intel reported an 8% drop in revenue from the fourth quarter of last year. Net income dropped 26%.

Coincidence? I think not. Personal computers have been Intel's primary market for decades, and the company was late to recognize how much smartphones and tablets were eating the PC market's lunch. The company has said it would reduce its workforce by 5% this year. Last month, it said it would close a Costa Rican facility, cutting 1,500 jobs. It also will delay the opening of its Fab 42 in Arizona.

The search for growth and revenue is one reason Intel has been raising the profile of its foundry business over the last year. It entered the foundry business in 2010, taking on a few small customers such as the programmable logic startups Achronix Semiconductor and Tabula. Intel CEO Paul Ortellini downplayed the moves at the time, saying, “We don't see ourselves as a general-purpose foundry.”

However, last year, Intel signed Microsemi Corp., a $1 billion company that sells analog and mixed-signal semiconductors, along with Altera, a $1.5 billion FPGA vendor. It also named a new CEO, Brian Krzanich, who came up through Intel's manufacturing organization and is pushing the foundry business. “If we can utilize our silicon to provide the best computing, we'll do that,” Krzanich said at his company's analyst day last fall. “People who can use our leading-edge technology and build computing capabilities that are better than anyone else's, those are good candidates for our foundry service.”

In fact, Len Jelinek, senior director and chief analyst at IHS Electronics and Media, told us Krzanich started the eight-inch fab in Hudson, Mass., where Intel has been doing small amounts of custom foundry work for a decade.

But analysts differ on whether Intel's goal is to target a specific chip manufacturing niche or go into full-scale competition with general foundries like TSMC. In fact, nearly all of Intel's customers so far have been in programmable logic, an area that doesn't directly compete with Intel processors. (Over on Electronics360, I analyze Intel’s foundry activities in more detail.)

It's hard to understand the big picture here, but it seems that the programmable logic business is meshing with the processor business. But whose processor business? The Intel foundry is using its most advanced technology — a 14-nm, FinFET transistor process — to manufacture Altera's Stratix 10 chips, which include four ARM Cortex A-53 processor cores. ARM is Intel's chief rival in the mobile chip market.

In March, Intel and Altera expanded their deal. Intel said in a press release: “Altera's work with Intel will enable the development of multi-die devices that efficiently integrate monolithic 14 nm Stratix 10 FPGAs” — which include ARM cores — “and SoCs with other advanced components, which may include DRAM, SRAM, ASICs, processors” — additional processors, presumably — “and analog components, in a single package.”

Though the announcement stressed Intel's assembly and packaging capabilities, I wonder who is supplying those added processors and, for that matter, where the DRAM, SRAM, ASICs, and analog components are coming from.

The Stratix 10 FPGAs are aimed at high-end applications in communications, computing, broadcast, and military markets. Though the press release didn't elaborate, an Altera whitepaper published last summer explains that these FPGAs are aimed at next-generation infrastructure, including datacenters (which need servers with low energy consumption and footprint but high processing power), wired networks (which are going to 100Gb Ethernet), optical networks, and base stations that serve mobile devices (which are moving to LTE). “Customization and flexibility at the hardware level,” i.e. FPGAs combined with SOCs, can address power consumption and other problems OEM face in these areas, the paper said.

“Together, both companies are building off one another's expertise with the primary focus on building industry-disrupting products,” Sunit Rikhi, vice president and general manager of Intel Custom Foundry, said in the March release.

This foundry deal is about more than just manufacturing work to fill Intel's fabs. It will be interesting to see where it leads Intel in the coming years and how or whether it can replace that declining PC revenue in time.

10 comments on “Intel’s Foundry Goal: Next-Gen Systems?

  1. t.alex
    May 13, 2014

    Processors are becoming commodity nowadays. With programmable logic like FPGA, more interesting products can be developed. Of course Intel can play an important role in reducing the power consumption – which is still a major concern. 

  2. Hailey Lynne McKeefry
    May 14, 2014

    The battle cry in technology is evolve or die. Certainly, Intel has a strong track record of staying ahead of that curve. It will be interesting to see where it takes them next.

  3. t.alex
    May 18, 2014

    In any case, programmable logic still has strong demand in other sectors than mobile devices such as industrial, avionics, military applications.

  4. Wale Bakare
    May 18, 2014

    >>programmable logic still has strong demand in other sectors than mobile devices<<

    The main reason why FPGA market's pulling head to head with microcontroller/microprocessor is that digital video application business domain serves as the main consumer for FPGA/ASIC.

  5. Wale Bakare
    May 18, 2014

    >>Intel can play an important role in reducing the power consumption – which is still a major concern<<

    How best do you think Intel could compete with the likes of Imagination Technologies' PowerVR systems?

  6. Wale Bakare
    May 18, 2014

    In addition, according to a Cisco report, “…Mobile video already makes up more than half of the data transmitted worldwide, the company says – and by 2017 it will make up two-thirds of it”. That's one big factor for GPU/SOC markets demand.

  7. ahdand
    May 19, 2014

    @Jacob: I feel that intel has a better chance in getting in to the market since they have a very stabilized name plus the market share is huge. True that their current market share does not have any direct impact with what this product does but it's the same category and the name plays a major role in it. 

  8. t.alex
    May 24, 2014

    Wale, also including Networking or highspeed processing.

  9. Wale Bakare
    May 24, 2014

    Yeah, i also think automotive designs – infotainment systems in particular.

  10. Hailey Lynne McKeefry
    May 30, 2014

    @Wale, great point…and the emerging Internet of Things will put more demand for various kinds of sensors. these new directions do change the marketplace.

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