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There is no time to waste in the global chip war

Published: 25 Feb. 2024, 20:10

Intel is sprinting towards its goal of retaking the chipmaking leadership it lost to Asian competitors. At its inaugural foundry event last week, the U.S. tech behemoth announced an ambitious road map to moving to the 18A (1.8-nanometer chipmaking) and 2-nanometer process within this year and to begin producing a 1.4 nanometer node in 2027. Microsoft was among the first customers for its 18A chips.

Intel’s bold foundry initiative could pose a serious threat to Korean chipmakers. If it can start mass production in the 2-nanometer or lower process next year, it could instantly match or even overtake dominant foundry player TSMC and runner-up Samsung Electronics. Intel CEO Pat Gelsinger bragged that the company’s 18A chip would exceed TSMC’s process speed. All three companies are racing to start the 1.4-nanometer process, which could significantly advance capabilities for AI tasks, in 2027.

Intel’s foray could shake up the foundry market. TSMC currently dominates that space with a share of 57.9 percent, followed by Samsung Electronics with 12.4 percent, the U.S.-based Global Foundries with 6.2 percent, Taiwan’s UMC with 6 percent, and China’s Semiconductor Manufacturing International Corporation with 5.4 percent, according to market tracker TrendForce.

Gelsinger vowed to change the global chip map, of which 80 percent is concentrated in Asia, to one in which the United States and Europe take a 50 percent share. In other words, Intel aims to steal 30 percent from Asian players. Intel’s aggressive offensive will bolster the headwinds for Korean chipmakers, whose mainstay memory business has been faltering, while their gap with TSMC in the foundry business widens.

Intel’s confidence owes much to the U.S. government’s aggressive push to regain chip supremacy. It has doled out $1.5 billion in subsidies to GlobalFoundries Inc. and is expected to funnel $10 billion into Intel projects. The chipmaker also has the backing of U.S. tech giants. During the Intel Foundry Direct Connect conference, Microsoft CEO Satya Nadella announced that his company will produce chips in Intel’s facilities.

Samsung Electronics also announced a partnership with British firm Arm. But individual corporate endeavors cannot ensure a lead in the chip war. A combination of aggressive corporate investment to stay ahead in the technology race as well as government support is essential. Japan is providing $10 billion in subsidies for the TSMC plant to help revive its chip ecosystem. TSMC’s first Japanese factory in Kumamoto was completed in 20 months after nonstop construction. There is no time to waste in the chip war.