Intel CEO trip to Taiwan seeks to secure TSMC 3nm supply: analyst

A recent visit by Intel Corp. CEO Pat Gelsinger to Taiwan was undertaken in an effort to secure for the company the supply of Taiwan Semiconductor Manufacturing Co. (TSMC) chips made using the advanced 3 nanometer process, according to an analyst.

Yeh Hsien-wen (???), vice president of PGIM's fund management team for the greater China market, said Gelsinger, who earlier this month said Taiwan is an unstable place in the wake of China's military threats, surprised many with a recorded video released on Tuesday, after his arrival in Taiwan the previous day, in which he announced Intel plans to invest in the country's "incredible ecosystem" in the semiconductor industry.

Following Gelsinger's earlier comments, TSMC Chairman Mark Liu (???) said few people believe geopolitical factors make Taiwan unstable.

Geopolitical tensions could have a short-term impact, but Taiwan can help create a brilliant decade for the global semiconductor industry, with the best technology and the best manufacturing ecosystem, he added.

By praising TSMC's remarkable achievements in his recorded speech, Gelsinger was trying to ensure the Taiwanese chipmaker reserves its 3nm process technology production capacity for Intel, Yeh said.

Gelsinger arrived in Taiwan on a private jet Monday night. The market widely anticipated he would meet with TSMC executives to discuss future cooperation.

Intel has lagged behind its American rival Advanced Micro Devices Inc. (AMD) in high-end process development and has set its sights on supply from TSMC by outsourcing production to the Taiwanese contract chipmaker, Yeh said.

The desire to secure supply using the chipmaker's sophisticated 3nm process explains Gelsinger's efforts to mend fences and maintain a close partnership with TSMC after recent barbs, Yeh added.

The Taiwanese chipmaker started production on a trial basis earlier this year and mass production is scheduled for next year.

TSMC is expected to start supplying chips made using the 3nm process in 2024, Yeh said.

Local media cited sources close to the deal as saying that Intel has been eager to secure 3nm process supply from TSMC, asking the Taiwanese firm to exclusively designate production capacity for the American firm over the next two to three years.

Currently, TSMC has designated exclusive production lines for Apple Inc., the sources said. With its close business relationship with Apple, TSMC is believed to serve as the sole processor provider for iPhone production.

TSMC has asked Intel to pay a deposit in advance of securing the production capacity it wants as 3nm process development costs have been huge, the sources said.

In addition to the 3nm process, Intel has also shown an interest in TSMC's 7nm, 6nm and 5nm processes, which will be used to defend its market share against AMD and others, they added.

Intel's production capacity has failed to meet strong global demand for emerging technologies, in particular in high performance computing devices, according to the sources.

As a result, the company is seeking assistance from TSMC, which commands a more than 50 percent share of the global pure play wafer foundry market by maintaining a lead over its peers in high-tech process development.

With chips produced using the 3nm process rolled out in Tainan, TSMC is also developing the even more advanced 2nm process with production expected to start in Hsinchu.

Gelsinger left Taiwan on Wednesday morning.

Both Intel and TSMC declined to comment on their meetings.

Source: Focus Taiwan News Channel