Intel could become TSMC's third largest customer by 2023

Intel CEO Pat Gelsinger is currently in Taiwan to meet with TSMC and other important supply chain representatives and discuss the current semiconductor market situation. Gelsinger seems to be quite enthusiastic about Intel’s collaboration with TSMC after the talks, as reported by DigiTimes. However, the Intel CEO was quite confrontational before his trip to Taiwan, yet DigiTimes now reports that Intel and TSMC will maintain a close partnership at least until 2025 when the Taiwanese foundries are expected to initiate production on the 2 nm nodes. Intel could eventually become one of the top three growth generators for TSMC by 2023 with the advent of the 3 nm production process.

As DigiTimes points out, Intel appears to have conflicting views when it comes to its partnership with TSMC. On the one hand, Intel is trying to regain its process leading position, while on the other hand, the process delays from recent years have been forcing the giant to seek outsourcing help from other foundries like TSMC. If Intel is to remain on good terms with TSMC, it will need to pay 50% gross margins to the Taiwanese foundries for the foreseeable future while still spending tens of billions building new facilities. There is also the possibility of Intel getting excess capacity, at which point it would immediately start producing chips in-house and rely less on TSMC. This excess capacity may also be utilized to produce chips for other companies like Qualcomm or AWS.

Right now, Apple is the largest TSMC customer with almost 26% of the production capacity, followed by MediaTek with 5.8% and AMD with 4.39%. Intel is all the way down in 11th place with 0.84%. Of course, TSMC will need to scale capacity accordingly so that Intel does not have to push out important customers like AMD, Qualcomm, etc. DigiTimes was also reporting that AMD and Qualcomm could partially outsource to Samsung’s 3 nm nodes in case TSMC cannot expand capacity fast enough, so there is always that alternative. Intel will ultimately try to get the maximum out of the US government subsidies for the new facilities, and, at the same time maintain a strong partnership with TSMC.

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