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Comment by testdelacc1 | Hacker News Reader

Assuming they’re telling the truth, they’ve successfully built one chip from that fab. That’s good, but it doesn’t mean the fab is capable of manufacturing at scale while turning a profit.

They need an external customer for the fab so they can iterate and work out the issues. It’s anyone’s guess if someone trusts intel to manufacture on their behalf instead of sticking with an established player. They’re stuck in a chicken and egg situation - can’t reach high yields without a customer, but a customer only wants to sign up if the yields and future deliveries are guaranteed.

Intels only hope might be that someone, not naming names, coerces an established company to sign up.

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That's too pessimistic. In general, customers don't want to be dealing with a monopolist and foundry customers are no different. It's in everyone's interest to solve the unproven process problem, so if Intel has evidence that the process isn't bust, customers will find a product which can be used as a pipe cleaner for mutual benefit.

Specially companies like Nvidia for which the gross profit margin is so high their risk of losing TSMC is higher than risk of losing money.

Apple is similarly paranoid about single-sourcing -- off the top of my head I'm not sure whether their top-end M-class chips are currently fabbed by both TSMC and Samsung, or just TSMC>

They always are the first ones to use the most advanced node by TSMC, the designs probably are only compatible with that particular process. Have not heard of apple using samsung for SoCs.

Apple used Samsung through the A7. Moved to TSMC for the A8.

Sorry for not adding ”in the past decade” at the end of that sentence.

Because if there was only a single source (for example if the other one was out-competed), they'd have to pay 30% of their revenue for the privilege of being in the FabStore.

This is already happening. The leading edge node wafers cost a fortune compared to older nodes. TSMC has limited capacity, as it takes years to bring new fabs online, and with competitors struggling they have great pricing power. Maybe why their revenue has roughly tripled over the last decade.

Samsung has already announced that their frontier node (what they call 1.4nm) is going to delayed at least two years, and issuing statements calling it into question at all. Intel has announced that they will only do what they call 14A if they can get a partner who will promise to use it in significant volume.

As of this moment, the only company that is definitely going ahead with that next generation node is TSMC. The other two companies capable of doing so are both signalling that they will only do it if they get a partner who promises to use them for significant volume, not just as negotiating leverage against TSMC.

Isn't the traditional solution to offer a really big rebate to the first customer?

Like 75% off for the first run of chips?

If Intel doesn't even want to dogfood their own node, this isn't a matter of tuning sales incentives.

https://semiwiki.com/forum/threads/nova-lake-to-use-tsmc-n2p...

> It’s anyone’s guess if someone trusts intel to manufacture on their behalf instead of sticking with an established player.

Intel also designs its own chips. Thus, it's hard for fabless players to buy in without worrying about their IPs being stolen. One of the strengths of TSMC is they only make chips. They don't do anything else. TSMC is highly trusted by its customers.

Intel has a habit of giving up on things too early. So I'm not sure I would trust them with anything even if they had a better process or were less expensive or easier to work with.

Yup. Let’s see how they do with Arc. It takes multiple years and architecture revisions to catch up, and honestly they’ve been making very respectful improvements from Alchemist to Battlemage, and driver support and updates have been progressing very well.

I hope they don’t can it.

I think that's the industry's viewpoint as well. Intel's fabs' biggest customer was Intel. They're not doing well, so they're not fabbing as much especially at the leading edge. It'll death spiral.

The foundries they're putting together for future manufacturing are just hoping customers will comes. Intel needs partnerships because the brand isn't the same since the core founders and builders are long gone.

I don't get it. Intel has a very huge customer for their 18A node, one that could bring billions in orders: itself.

If they themselves don't produce their chip there, why would anybody else do?

As far as I have read, even with themselves as the primary customer, there is still enough excess capacity to make it unprofitable to use the most advanced processes. I see it as a strict cost issue — the new fab costs $X to run. Intel can only keep it running Y% of the time with its own orders. You need someone to fill in the gap. Not to mention, at the moment the entire cost of an Intel fab is being amortized across only Intel chips. If they can spread that out to external customers, then they can start to make their CPUs more cost competitive (or better margins, or both).

Plus, if the goal is to make more chips domestically (of all kinds), Intel will need to show that they can fab chips for other customers, not just their own designs.

Here's the thing, they've completely given up and started making their (inferior to AMD) CPUs on TSMC. For example, Arrow Lake is on TSMC N3B. So it's not getting amortized over anything at all and their valuation is going to 0.

Intel certainly will use 18A for their own chips:

CEO Lip-Bu Tan: "Job number one is ramping Intel 18A at scale. Intel 18A and Intel 18A-P are critical nodes for Intel Products and will drive meaningful wafer volumes well into the next decade – starting with Panther Lake later this year."

But they don't want to be the ONLY customer. Intel wants other companies to invest, and as early in the processes as possible, so Intel doesn't have to bankroll the whole thing.

"Going forward, our investment in Intel 14A will be based on confirmed customer commitments. There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it"

https://newsroom.intel.com/corporate/lip-bu-tan-steps-in-the...

> They need an external customer for the fab so they can iterate and work out the issues.

I guess you mean Intel to iterate using its own money to get the customer's chip right, no?

This is common in industry. You often do give a discount and guarantees to the first users of a system to compensate for the risk the customer is taking.

This is part of how DigitalOcean got going, Kingston gave a huge discount on a traditional HDD order if the order was switched to SSD instead because they wanted to kickstart scaled manufacturing. First time an SSD was put in and the IOPS was measured, the product direction was clear, at the time we thought it might be a CDN tho, but eventually landed on a "cloud hosting provider".

that customer could've been apple. since they used to have a close relationship, till intel shit the bed.

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