2020-07-28

End of era for the American chip sector in Intel 'stunning failure'

Article Edited by | Jhon N |

Image:-intel

Santa Clara, California, is the largest chip-maker in the last 30 years, combining the best designs with state-of-the-art plants still operating in the U.S.

Intel Xeon chips run computers and data centers that support the development of nuclear, spacecraft and jet power stations, while enabling governments to understand intelligence and other crucial information quickly.

At the end of a time in which the company and the US dominated the semiconductor industry, Intel Corp. decided to consider outsourcing manufacturing heralds. The move could go far beyond Silicon Valley, influencing international trade and geopolitics. The company based in California, Santa Clara has for the majority of the past 30 years been the largest chip manufacturer in combination with state of the art designs and cutting-edge manufacturing facilities.

Most other U.S. chip companies shut up or sold domestic plants years ago and had components produced by other firms, especially in Asia. Intel argued that improving both its side and creating better semiconductors. The strategy is currently in tatters, with factories struggling to keep up with the latest manufacturing process of seven nanometers.

After CEO Bob Swan said Intel is planning outsourcing, the company sank 16% on Friday, mostly since the market crashed in the early days of the Covid 19 pandemic in March. The shareholdings of the company were not fully traded. "We see the misfits of the road map as an incredible failure for a company once known as faultless execution, and could well represent the end of Intel's computing dominance."

Swan says it's not that important where a semiconductor is made. But domestic chip manufacturing has become China's national priority, and some United States politicians and national security scientists regard it as a potential dangerous mistake to send this technical know-how outside the EU. "We saw how vulnerable we are," a top Republican Senate member, John Cornyn, told the US parliamentary authorities in June about $25 billion worth of financing and tax credits to boost domestic production of semiconducers.

Intel Xeon's chips run computers and data centres, which enable governments to quickly understand intelligence and other critical information in order to develop nuclear power stations, spacecraft and jets. Many are produced in Oregon, Arizona and New Mexico. Many of these processors. If Intel does this work, Taiwan Semiconductor Manufacturing Co., a production-centered company and currently the world leader, would probably do so. The company is based in Hsinchu, one of the closest to China in Taiwan, and regards Asia as rather an independent province than a rogue island.

We believe that Intel has no chance of catching or overwhelming TSMC for at least the next half decade if ever, with the latest process technology pushout,' writes Chris Rolland, an analyst at Susquehanna in a research note. He believes that Intel should sell TSMC's plants, but that is unlikely he says.

Intel has spent tens of billions in the years updating its factories, which were highlighted as a decisive advantage by all the predecessors of Swan, keeping the company ahead of the rest of the industry. As the largest chip manufacturer, Intel benefited from economies of magnitude and attracted the best engineers and scientists.

Intel produces more than a billion chips each year, while Intel makes hundreds of millions. This has given the Taiwanese company more experience in improving their factories and helping TSMC engineers in technical execution overtake their Intel partners. On Friday, Swan said that despite the production delays Intel's products remain the best. But by opening the way to externalisation, the CEO threatens one of the U.S. technology leadership's last bastions.

"Internet would abandon what has been its principal source of competitive advantage for 50 years, presumably through the outsourcing of leading edge technology to TSMC," Caso of Raymond James said.