Intel's UMC Partnership Is A Big Deal. For UMC.
If Intel could have developed and deployed the proposed 12nm specialty process on their own, they would have....
UMC announced earnings last week but since the earnings call, particularly the Q&A, was so totally dominated by the recent partnership announced with Intel, we decided to mainly focus on that, instead of earnings.
In a nutshell, not even six months after announcing a partnership arrangement with Tower Semi, Intel announced a new partnership with Taiwan’s UMC on January 24, 2024. While there are similarities between the the Tower and UMC deals, they are fundamentally different in nature and structure.
At this juncture, we see Intel deploying no less than four distinct tactics in their efforts to achieve their goal of becoming the global #2 foundry player by 2030. These are:
#1 Acquire smaller second/third tier foundry players (e.g. the failed bid for Tower in 2023)
#2 Partner with second/third tier foundry players to leverage existing, unused manufacturing capacity by manufacturing product on their behalf, using their process technology
#3 Partner with UMC to jointly develop a new, co-owned speciality technology process and then manufacture products based on that technology on their behalf and also on your own behalf
#4 Leverage your leading node process technology (when it’s ready, e.g. 18A) to manufacture products on behalf of new customers while using prepayments from those customers to guarantee capacity volumes, commitment etc.
Technically, you could add in a fifth tactic, i.e. what Intel is currently doing for MediaTek by developing a custom variant of their (Intel’s) 22nm process, aka 16nm, and manufacturing products on that process node on behalf of MediaTek.
So, what are we to make of Intel’s latest foundry deal which yet again blurs the line between UMC being both a foundry competitor and a foundry customer? Our take on this, earnings, guidance and more beyond the paywall. Thanks as always for reading!
Keep reading with a 7-day free trial
Subscribe to Semicon Alpha to keep reading this post and get 7 days of free access to the full post archives.