Specialist
Former SVP at GlobalFoundries US Inc
Agenda
- Key takeaways from Intel's (NASDAQ: INTC) IDM (integrated device manufacturer) 2.0 strategy announcements
- IFS (Intel Foundry Services) strategic rationale and customer base development
- Timeline to IFS capacity ramp, investment schedule and yield/utilisation scenarios for Intel manufacturing operations
- US federal, state and local incentives and implications for fab buildout costs
- Intel's node transition roadmap and ability to win process leadership back from competitors, particularly TSMC (TWSE: 2330) and Samsung (KRX: 005930)
Questions
1.
Could you outline the state of the foundry market and summarise the major themes and trends?
2.
What are your 12-18-month expectations for the semiconductor cycle’s progression, potential equalisation of supply-demand and manufacturing capacity, whether or not that aligns more directly with demand?
3.
Might there be a risk of oversupply or a downswing over the next two years?
4.
What are your thoughts on IFS [Intel Foundry Services] and the IDM [integrated device manufacturing] 2.0 strategy?
5.
It’s not the first time Intel has discussed and entered the foundry market and the costs of jump-starting new fabs are at the highest ever, given the tools involved at advanced manufacturing processes plus TSMC’s continued domination. Do you expect Intel to be successful in the second go around? What makes this the right strategy when the strategy already fell flat a few years back?
6.
You commented that Intel perhaps didn’t grasp the importance of developing the ecosystem around the foundry. Can you elaborate? What was missing the first time? What did the company do poorly this time, just so we can evaluate initiatives and how the ecosystem is being developed in this fledgling IFS business?
7.
What’s your assessment of Intel’s IP, given the importance of IFS to the company’s wider strategy? What approach is it taking with IP today? Does that tick enough boxes in providing the customers what they want and with the involvement they need early on? Is it doing enough there?
8.
Intel has invested for decades into a good amount of its IP. To what extent is that a needle-mover in competitive discussions vs a player such as TSMC? Does that move the needle vs other factors when prospective customers are evaluating IFS for future business, or is that a secondary factor?
9.
How are you thinking about IFS’ potential customer base? There were wins announced with Qualcomm, AWS, and the US Department of Defense. Who do you consider the major customer cohorts that will do business with IFS? Which customers might be more recalcitrant, and why?
10.
Intel’s plans are for two new large manufacturing facilities. As the company continues to ramp its manufacturing capacity, do you think it will win significant or substantial numbers of customers such that the dollars it’s allocating towards large facilities build-outs have the ROI needed and properly yield the manufacturing facilities that will be dedicated to IFS? Could this be an issue?
11.
It’s been said in previous Interviews that having a supplier to the Apple ecosystem be able to participate in the scale that Apple brings will be a key barometer for IFS’s success. Would you agree? What do you think will be the major milestones or checkpoints in customer wins or revenue growth for IFS over the next 12-24 months, or 36 months-plus?
12.
Can you elaborate on the potential competitive dynamics over the next 24-36 months if IFS can ramp up its book of business and get the commitments it needs from prospective customers? What are the relationships among leading-edge manufacturers such as Intel, TSMC and Samsung, especially given Intel is now leveraging TSMC for some of its outsourced manufacturing?
13.
Samsung and TSMC are now at a competitive advantage and have a lead in the nodes they can manufacture. To what extent could this hamper IFS’s competitiveness, at least in the medium term, or even in the long term assuming Intel remains a step behind? What does that mean for IFS business that Intel may be unable to offer the most leading-edge process node?
14.
You referenced Intel’s aggressive process technologies roadmap. Obviously, CEO Pat Gelsinger has talked about re-establishing leadership over the next few years. What’s your take on the company’s ability to follow through on the execution, based on how it operates, the leadership team or the logistics involved in making the leaps outlined?
15.
Intel announced USD 20bn in CAPEX for new fabs a few months ago, as well as extremely aggressive spending plans over the next few years. How do you assess CAPEX for the company over the next few years? It has already discussed on a recent earnings call that investors should expect margins to be depressed over the next few years vs historically, given the massive scale of investment. What are your expectations for the costs involved in establishing the additional manufacturing capacity? Over what time period should we expect the significant ramp in those and production at those facilities?
16.
How should we assess the costs involved at each of Intel’s new facilities? What contributes to the price tag for each and how should we think about wafer production per day within those fabs ramping over time?
17.
How will Intel ramping up its IFS book of business work operationally within the fab? Would specific lines be dedicated towards the foundry segment or entire fabs? How might the company allocate manufacturing capacity towards IFS as it ramps? Could having to manage outside customers for the first time, as opposed to just Intel itself, create issues on the floor of the fabs?
18.
To what extent do you consider Intel as a major beneficiary of a more protectionist policy from the US government in semiconductor manufacturing? How aggressive you expect US state or federal funding or incentives to be to support Intel manufacturing? Do you think a certain proportion of the cost could be borne by the US government through incentives? How do you evaluate the US government’s potential role in protecting semiconductor manufacturing from the lower-cost competitors?
19.
Can you summarise your thoughts around the IFS strategy? Intel has its fingers in a lot of different areas – standing up a foundry business, regaining node leadership and competing with AMD in the data centre. How do you expect this story to play out for the company over the next few years? Could it keep its eye on the ball in all these scenarios, or do you think it may be successful in 1-2 areas and less successful in others? What could that mean for its operational strategic performance over the next 2-3 years?
20.
What is the biggest question mark hanging over IFS for you? When would you consider it being less of a speculative enterprise vs more concrete? What question needs to be answered before you have more confidence?
21.
Do you have any final thoughts? Is there anything we did not do justice to or any final notes?
