Intel to Attract Contract Clients Through Chip Packaging Services

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At the Deutsche Bank technology conference, Intel’s CEO, Patrick Gelsinger, highlighted the company’s aspirations to become one of the largest contract chip manufacturers by offering chip packaging services.

Gelsinger explained that Intel has unexpectedly gained an advantage in the market by having advanced capabilities in assembling various chips into a single computing solution. Leveraging this expertise, the company aims to attract a significant number of contract clients. He noted that the global industry currently faces a shortage of packaging capacities using the CoWoS (Chip-on-Wafer-on-Substrate) method offered by TSMC. This method is crucial for producing high-performance computing accelerators, such as NVIDIA’s AI inference accelerators. While TSMC plans to double its CoWoS capabilities by the end of next year, Intel believes it can offer competitive services to the market right now.

Gelsinger acknowledged that Intel’s chip packaging technology, known as Foveros, is slightly different from what TSMC offers, but it effectively addresses the same challenges. He suggested that for many developers of high-performance AI accelerators, Intel could be a valuable partner for advanced chip packaging solutions. Additionally, this move would help Intel build a reputation among new clients, potentially leading them to consider Intel for silicon wafer processing services.

During his presentation, Gelsinger also discussed the optimal use of existing facilities, emphasizing that transitioning to contract manufacturing would allow Intel to repurpose older plants more efficiently. These facilities could house equipment for chip packaging and testing, enabling Intel to make better use of its capital.

Gelsinger recently visited Intel’s production facility in Oregon and expressed confidence that the company is on track with its 18A technology development, not only in alignment with its own plans but also meeting the expectations of its clients. Intel expects to have this technology ready for production by the end of next year, which will enable the company to reclaim its technological leadership in lithography by 2025.

While Gelsinger acknowledged that attracting contract clients for silicon wafer processing will take time, he emphasized that Intel is making progress in this field. He explained that the company’s efforts in optimizing costs, achieving technological leadership, and receiving subsidies from U.S. and EU authorities will allow Intel to offer competitive prices to clients. Moreover, once Intel regains its technological leadership, clients are likely to seek its services.

It’s worth noting that Intel has openly mentioned three clients ready to receive products manufactured with its 18A technology by 2025. These clients include defense giants Boeing and Northrop Grumman, as well as Swedish telecommunications equipment manufacturer Ericsson. Recently, a significant client expressed interest in obtaining 18A chips and provided Intel with an advance payment, which will be used to expedite the setup of packaging and testing facilities in Arizona.

Intel’s strategic shift towards becoming a prominent player in contract manufacturing services could have a significant impact on the semiconductor industry, potentially reshaping the competitive landscape in the years to come.

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Martin Harris
I'm Martin Harris, a tech writer with extensive experience, contributing to global publications. Trained in Computer Science, I merged my technical know-how with writing, becoming a technology journalist. I've covered diverse topics like AI and consumer electronics, contributing to top tech platforms. I participate in tech events for knowledge updating. Besides writing, I enjoy reading, photography, and aim to clarify technology's complexities to readers.

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