TSMC Founder Criticizes Intel's Strategy, Suggests Focus on AI Over Foundry Business

TSMC founder says Intel was wrong to pursue the foundry model

In a nutshell: Pat Gelsinger's vision of transforming Intel into a chip foundry might have been a recipe for failure, but many industry experts argue that his departure was premature. TSMC founder Morris Chang has consistently questioned this strategy, suggesting that Intel could have pursued a more lucrative path by capitalizing on the booming AI market. Taiwan Semiconductor Manufacturing Co. founder Morris Chang said Intel should have prioritized designing artificial intelligence processors rather than attempting to reclaim its leadership in process technology and transition into a contract chipmaker. While attending the launch of the second volume of his autobiography, Chang expressed his confusion over Pat Gelsinger's departure from Intel. Like many industry analysts, he questioned whether the decision stemmed from flawed strategy or poor execution. The relentless demand for AI chips has proven highly beneficial for the semiconductor industry. The sector is poised to end 2024 on a high note, following several consecutive months of sales growth and achieving a record-breaking monthly sales total in October. TSMC supplies most of the world's leading-edge silicon, including Nvidia's highly sought-after artificial intelligence GPUs. For over three years, Intel has struggled to reinvent its foundry business and attract customers with key capabilities, such as advanced packaging for systems-on-chip, but with limited success. Chang believes this approach was flawed, as it ignored the market's realities, where companies of all sizes have scrambled to acquire as much AI hardware as possible. Notably, Nvidia - despite not owning chip factories - generates tens of billions of dollars annually by selling artificial intelligence processors and is now one of the world's most valuable companies. While Intel spends significantly more on research and development than its rivals, these resources have mostly been directed toward areas like process technology and a faltering discrete GPU business. Meanwhile, the company has deprioritized AI technologies like Gaudi and its related software ecosystem. The situation was further complicated by Gelsinger's remarks about TSMC, which he used to promote Intel's foundry efforts. These comments soured the company's relationship with the Taiwanese semiconductor giant. In his recently released biography, Chang recalls a critical moment in the 1980s when Intel declined an offer to invest in TSMC. Chang also noted that following Gelsinger's resignation last week, Intel's future looks more uncertain than ever. Finding a new CEO and developing a fresh strategy to turn things around will take time, a luxury that Team Blue no longer has.

TSMC's Founder Slams Intel's Business Strategy, Says That They Shouldn't Have Entered The Chip Business

Intel shouldn't have entered the chipmaking business, says TSMC's Founder Morris Chang, claiming that Team Blue would be much better if they focused on the AI markets. Well, Team Blue isn't having a great time in the industry in general, especially when considering the fact that on one end, they are under substantial financial troubles, and on the other, the firm's CEO, Pat Gelsinger, decided to take an unexpected retirement. It won't be wrong to say that Intel is in a challenging position right now, which is why TSMC's founder Morris Chang believes that Team Blue would be much better if it didn't enter the foundry business and would've instead focused on AI. I don't know why Pat resigned. I don't know if his strategy was bad or if he didn't execute it well...Compared with AI, he seemed to focus more on becoming a foundry. Of course now it seems that (Gelsinger) should have focused on AI. They currently have neither a new strategy nor a new CEO. Finding both is very difficult. - TSMC's Founder Morris Chang via Reuters TSMC's founder's seemingly "firing comments" at Intel's situation clearly show that the market dynamics have evolved tremendously over the past few months, with Team Blue going from the top of its game to even struggling to find a hold on the market. Chang's remarks on Intel's foundry business aren't that odd when you consider that the IFS hasn't managed to put one of its processes in the mainstream markets, and the division's "hyped up" 18A node isn't looking promising, at least for now. Intel's competitors, notably AMD and NVIDIA, have managed to find a grip over the AI markets, with both of them having a robust AI portfolio, whereas for Team Blue, well, their Gaudi AI accelerator lineup hasn't managed to bring in much revenue when compared to competitors, which shows that Intel's AI business has seen a sluggish momentum throughout the past few quarters. It won't be wrong to say that Intel's "jack of all trades" approach hasn't worked out quite well, as the firm is still navigating its way in new business segments. Gelsinger, who was a huge advocate for Intel Foundry, is no longer in the business, which leads us to believe that Intel will see a radical shift in its business approach moving into the future. It will likely focus more on the manufacturing business and maybe put its chip ambitions in the backseat for now.

TSMC founder says Intel has neither a strategy nor a CEO

(Image credit: Walid Berrazeg/SOPA Images/LightRocket via Getty Images) It's still arguably too early to confidently state how successful Intel's 18A process technology (1.8nm-class) will be. But in about a year, we should know if Pat Gelsinger's five nodes in four years plan was a success. That said, Intel's failure to offer a competitive AI processor is evident even today, which gives Morris Chang, the founder of TSMC, reason to claim that Intel should have focused on the development of AI processors rather than on making chips using leading-edge nodes. The TSMC icon also said that Intel had neither a strategy nor a new CEO, and that finding both will be difficult. "I do not know why Pat resigned," said Chang at a press conference dedicated to the publication of his biography, Reuters reports. "I do not know if his strategy was bad or if he did not execute it well." [...] "Compared with AI, he seemed to focus more on becoming a foundry. Of course, now it seems that (Gelsinger) should have focused on AI." Chang's criticism is understandable. Nvidia earns tens of billions of dollars per year selling AI processors, considerably more than TSMC earns on fabbing those chips. If Intel had competitive AI processors, it could make more money than it would on making chips for others, so it's easy to argue that an AI strategy should have been prioritized years ago. When Gelsinger took the reigns in 2021, his main strategy was focused on IDM 2.0, which involved developing five leading-edge process technologies in four years and becoming the world's second-largest contract maker of chips by 2030. While Intel clearly had a product strategy as well, the world has yet to see major products developed under Pat Gelsinger as the CEO. Last month, Intel announced it would miss its $500 million sales target for the Gaudi 3 AI accelerators this year due to software issues. It usually takes over three years to develop, implement, and mass-produce a chip. Gaudi 3 was at least partially defined before Gelsinger became the CEO of Intel, so it is impossible to say that he is responsible for this product's hardware. Nonetheless, insufficient focus on AI software seems evident. Chang's biography, released recently, provides a deeper context to his remarks. The memoir chronicles his life from 1964 to 2018 and sheds light on TSMC's key partnerships with companies like Apple and Qualcomm. It also recalls Intel's decision in the 1980s to decline an invitation to invest in TSMC, another move that, at this point, is easy to see in hindsight as a missed opportunity. Intel's current situation is marked by uncertainty. With no immediate successor for Gelsinger, its strategic direction seems the same for now -- develop competitive products and retain manufacturing operations -- and that means facing the same challenges. And although Gelsinger is out, the Board of Directors has yet to say whether the company has defined its revamped strategy for AI. "They currently have neither a new strategy nor a new CEO," Chang added. "Finding both is very difficult."

TSMC Founder: Intel Should Have Put AI Before Making Chips

Intel headquarters in California. (Credit: Picture Alliance via Getty Images) Intel faces "very hard" challenges now that it no longer has a CEO or a clear strategy forward, TSMC founder Morris Chang said at an event on Monday promoting his autobiography in Taiwan, according to reports from multiple news outlets. "I don't know why Pat resigned. I don't know if his strategy was bad or if he didn't execute it well," Chang said, referring to Intel CEO Pat Gelsinger's resignation last week, adding: "Compared with AI, he seemed to focus more on becoming a foundry. Of course now it seems that (Gelsinger) should have focused on AI." Compared to its rivals, Nvidia has made the most financial gains this year in large part because of its focus on the AI boom. Its stock is up over 195% this year, vying with Apple as the largest company by market capitalization in the world. Nvidia has profited from the AI hype by selling its existing H100 and H200 GPUs, which power AI data centers like Elon Musk's. Nvidia has also developed its own AI models, AI laptops, and an upcoming AI GPU dubbed Blackwell. Intel, however, doesn't even appear on one tracker's list of the top 100 companies by market cap. AMD, which recently laid off 4% of its staff, sits between Nvidia and Intel as the 50th-largest company by market cap globally. During the Monday event, Chang claimed Intel currently lacks a new strategy forward in addition to a new CEO. "Finding both is very difficult," he said. Chang also reportedly said he would not consult for Intel, even if the company asked him. Chang previously called Gelsinger "a bit rude" in October after the then-Intel CEO had remarked that no company should put "all of your eggs in the basket of a Taiwan fab," referring to TSMC's roots in Taiwan and that the region is unstable. Gelsinger's comment reportedly made TSMC cancel Intel's 40% wafer discount. PCMag has reached out to Intel for comment. TSMC, however, is currently building three chip manufacturing plants in Arizona and receiving $11.6 billion from the US government to do it. Its first Arizona plant is expected to start production in early 2025, with the other two slated to launch by 2030.

Intel should have focused on AI rather than chipmaking, TSMC founder says

TAIPEI (Reuters) - Intel should have focused on artificial intelligence rather than trying to become a contract chipmaker, the founder of Taiwan Semiconductor Manufacturing Co said on Monday, in relation to the recent departure of Intel's CEO. Morris Chang, at an event to launch his autobiography, said he did not know why Pat Gelsinger left Intel but that it seemed the U.S. firm sought a new strategy as well as a new CEO. Gelsinger was forced out of Intel earlier this month after directors felt his costly and ambitious plan to turn Intel around was not working and progress was slow, Reuters reported last week. Gelsinger was attempting to restore the company's lead in making the fastest and smallest computer chips for other companies, a business model known as "foundry" - a crown it lost to TSMC - the world's largest chip contract manufacturer. "I don't know why Pat resigned. I don't know if his strategy was bad or if he didn't execute it well...Compared with AI, he seemed to focus more on becoming a foundry. Of course now it seems that (Gelsinger) should have focused on AI," Chang said. "They currently have neither a new strategy nor a new CEO. Finding both is very difficult," he added. Intel did not immediately respond to a request for comment. Setting lofty ambitions for manufacturing and AI capabilities among major clients, Intel lost or cancelled contracts under his watch and also offended TSMC, with Chang calling Gelsinger "a bit rude", according to a Reuters special report in October. Chang last month released his memoir that recounts his life from 1964 to 2018 and includes some of TSMC's dealings with major customers such as Apple and Qualcomm, and how Intel turned down an invitation to invest in TSMC in the 1980s before becoming a key customer. (Reporting by Wen-Yee Lee; Writing by Brenda Goh; Editing by Bernadette Baum)

Intel should have focused on AI rather than chipmaking, TSMC founder says

TAIPEI, Dec 9 (Reuters) - Intel (INTC.O), opens new tab should have focused on artificial intelligence rather than trying to become a contract chipmaker, the founder of Taiwan Semiconductor Manufacturing Co (2340.TW), opens new tab said on Monday, in relation to the recent departure of Intel's CEO. Morris Chang, at an event to launch his autobiography, said he did not know why Pat Gelsinger left Intel but that it seemed the U.S. firm sought a new strategy as well as a new CEO. Gelsinger was forced out of Intel earlier this month after directors felt his costly and ambitious plan to turn Intel around was not working and progress was slow, Reuters reported last week. Gelsinger was attempting to restore the company's lead in making the fastest and smallest computer chips for other companies, a business model known as "foundry" - a crown it lost to TSMC - the world's largest chip contract manufacturer. "I don't know why Pat resigned. I don't know if his strategy was bad or if he didn't execute it well...Compared with AI, he seemed to focus more on becoming a foundry. Of course now it seems that (Gelsinger) should have focused on AI," Chang said. "They currently have neither a new strategy nor a new CEO. Finding both is very difficult," he added. Intel did not immediately respond to a request for comment. Setting lofty ambitions for manufacturing and AI capabilities among major clients, Intel lost or cancelled contracts under his watch and also offended TSMC, with Chang calling Gelsinger "a bit rude", according to a Reuters special report in October. Chang last month released his memoir that recounts his life from 1964 to 2018 and includes some of TSMC's dealings with major customers such as Apple (AAPL.O), opens new tab and Qualcomm (QCOM.O), opens new tab, and how Intel turned down an invitation to invest in TSMC in the 1980s before becoming a key customer. Reporting by Wen-Yee Lee; Writing by Brenda Goh; Editing by Bernadette Baum Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:TechnologyTechnology

Intel Should Have Focused on AI, Not Chipmaking, Says TSMC Founder

Intel should have focused on artificial intelligence rather than trying to become a contract chipmaker, the founder of Taiwan Semiconductor Manufacturing Co said on Monday, in relation to the recent departure of Intel's CEO. Morris Chang, at an event to launch his autobiography, said he did not know why Pat Gelsinger left Intel but that it seemed the U.S. firm sought a new strategy as well as a new CEO. Gelsinger was forced out of Intel earlier this month after directors felt his costly and ambitious plan to turn Intel around was not working and progress was slow, Reuters reported last week. Gelsinger was attempting to restore the company's lead in making the fastest and smallest computer chips for other companies, a business model known as "foundry" -- a crown it lost to TSMC -- the world's largest chip contract manufacturer.