Intel CEO: Clients Want Custom x86-Based SoCs
In a conversation with a financial analyst, Pat Gelsinger, Intel's chief executive, shared some interesting details about the company's expectations for the future, talks with potential Intel Foundry Services customers and their needs, Intel's capabilities to address these needs, and the company's way of taking advantage of internal and external manufacturing.
Historically, Intel has always built its core products, including some of the best CPUs, internally using leading-edge and advanced process technologies as well as outsourced some of its low-cost and non-core products to Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp.
But the economics of the semiconductor industry require Intel to get bigger and more flexible. To do, so it needs to adopt a different business model that it calls IDM 2.0 strategy. This approach entails Intel to produce most of its products in-house, outsource some of its products to contract manufacturers, and make chips for third-party customers.
Intel's IDM 2.0 strategy is certainly designed for the company's long-term success. It is extremely capital intensive, so in the coming years Intel will cease to buy back shares, but will invest in new manufacturing capacities instead. After all, leading-edge production technologies are so expensive to develop these days that Intel can only recoup its costs when used for very high volumes, so building up capacity is one of Pat Gelsinger's key tasks as Intel CEO.
