Intel Hits Bottom In The Datacenter – Maybe

It would be hard to pick a worse time to not have an XPU offload engine that can do lots of matrix math at mixed precision and that can ship in volume. But this is precisely where Intel finds itself as there is a server recession in the datacenter. And this, along with the difficulties of cleaning up its mess in chip manufacturing, is weighing down Intel’s financial results like Jovian gravity.

Earlier this month, we got some insight into Intel’s true financial health when it rejiggered its annual books for 2021, 2022, and 2023 to include its product groups paying the Intel Foundry business for chip etching and packaging services, just as if they were an outside customer like Microsoft and a handful of others who are signing up to use the company’s future 18A and we presume 14A processes. People are not just excited that Intel has opened up its fabs to outside business. They are trying to mitigate the risks of having all of the world’s chips coming out of one basket called Taiwan Semiconductor Manufacturing Co, which is having a tough time with earthquakes in recent weeks and is always under a threat of invasion by China.

Intel thinks is can be the second largest merchant foundry in the world by 2030, which seems likely enough, but as we pointed out in going over TSMC’s financials more recently, even should Intel get to the $40 billion in overall revenues that its forecasts suggest are possible – $15 billion of that from outside customers – TSMC will have an AI accelerator etching and packaging business that itself is larger than Intel’s foundry biz. Top be more specific, as we showed in our model, if TSMC grows faster than average in the next couple of years and then slows down lower than average in the couple of years after that, it will have around $178 billion in sales in 2030.

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