IDM Death Spiral

Can Intel escape the IDM Death Spiral?

There are interesting downstream implications of Intel using TSMC’s 3nm process to manufacture Arrow Lake and Lunar Lake CPUs. 

First, if these TSMC-fabbed CPUs demonstrate impressive performance, it validates Intel Product team’s competency. Im not questioning Product’s ability, but it’s hard for your chip designers to shine when using a less competitive process step. Using TSMC puts Intel Product back on even footing with fabless competitors for a more fair comparison.

A confirmation of Product’s abilities, combined with Intel’s brand strength, would support the notion that a fabless Intel could stand alone. Yes, the CPU market has peaked, but fabless Intel would still have a respectably large client and data center CPU business. 

At the same time, needing TSMC to make Intel Product team shine sheds light on the difficulty of the IDM strategy. Fab consolidation means the game is nearly binary right now—Intel Foundry is either beating TSMC, or they’re not. Thus, Intel Product is either …