Intel cuts off its arm to survive: plans to stop external sales of 18A process and bets on 14A advanced process to compete for TSMC customers

According to informed sources, Intel (INTC.US) new CEO Chen Liwu is brewing a major strategic adjustment to its contract manufacturing business, attempting to compete for large customer orders by focusing on more advanced process technologies. This plan, which sharply contrasts with the route taken by former CEO Pat Gelsinger, may expose the chip giant to billions of dollars in asset impairment risks.

Since taking the helm in March this year, Chen Liwu has initiated multiple rounds of cost-cutting measures. Sources say that by June, his management team had reached a new consensus: the 18A process technology heavily invested in during the Gelsinger era has encountered resistance in market promotion. The development of this process cost billions of dollars, and if promotion to external customers is halted, Intel may be forced to undertake asset impairment of hundreds of millions to billions of dollars. Although the company declined to comment on "hypothetical scenarios," it acknowledged that the core customers of the 18A process have always been Intel itself, with the Panther Lake notebook chips produced using this process scheduled for mass production in 2025, which the company calls "the most advanced self-developed processor in American history."

In terms of expanding its foundry business, Intel is facing competitive pressure from TSMC's N2 process mass production. Sources indicate that Chen Liwu has shifted the strategic focus to the more advanced 14A process, believing that this technology is expected to surpass TSMC's (TSM.US) current level, and is preparing to extend an "olive branch" to TSMC's core customers such as Apple (AAPL.US) and Nvidia (NVDA.US). However, this aggressive plan faces execution challenges: the mass production timeline for the 14A process remains uncertain, and Intel's internal chip orders are scheduled ahead of customer orders.

At the board level, the decision-making process regarding whether to completely abandon external sales of the 18A process is underway. Sources reveal that the relevant proposal will be submitted to the board for review as early as this month, but given the significant investment adjustments involved, the final resolution may be postponed until the fall meeting. The company statement emphasizes that the management team is focused on "strengthening the roadmap, rebuilding customer trust, and improving financial performance," having clarified strategic priorities and prepared to take "necessary corrective measures."

Financial data shows that this chip giant, which recorded its first annual loss since 1986, is expected to incur a net loss of $18.8 billion in 2024. Having missed the opportunity in the wave of mobile computing and artificial intelligence, Intel is now attempting to regain manufacturing advantages through generational leaps in technology. The new power supply scheme and transistor technology adopted by the 18A process were once expected to rival TSMC's N3 process, but industry analysts believe its actual performance may only be comparable to TSMC's N3 technology mass-produced in 2022.

It is worth noting that Intel has committed to producing specific 18A process chips for Amazon (AMZN.US) and Microsoft (MSFT.US), and this portion of orders is not affected by the strategic adjustments. The company stated that it will continue to fulfill customer commitments while customizing the 14A process technology according to major customer needs. Behind this shift in foundry business is Chen Liwu's strategic restructuring utilizing his over thirty years of connections in the chip industry, the effectiveness of which may determine whether Intel can regain its voice in the competition for advanced processes