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Intel has recently fired its Indian-American chief engineer Venkata Murthy Renduchintala, who also served as Group President of the Technology, Systems Architecture and Client Group (TSCG), for failure to deliver 7 nanometer semiconductor technology on schedule, according to Reuters. The news has knocked the market value of Intel by tens of billions dollars. The American company, the biggest global chip manufacturer with in-house fabrication plants, has also decided to outsource manufacturing. This could deal a serious blow to America's global leadership in chip manufacturing which is fundamental to all other computer and communications related technologies.
Intel's Global Leadership:
Intel Corp. (INTC), founded in 1968 in Silicon Valley, is the world's largest and the most advanced semiconductor company, larger than the second-ranked Samsung Semiconductors, and more than triple the size of the next-largest domestic producer, Qualcomm Inc. (QCOM).
What distinguishes Intel from most other semiconductor companies is that it manufactures its products in-house. The bulk of semiconductor “manufacturers” outsource the actual work of building their products out to foundries in China and Taiwan.
Last week, the company revealed that its smaller, faster 7-nanometer chipmaking technology was at least six months behind schedule and it would have to outsource manufacturing to keep its products competitive.
Taiwan Semiconductor Manufacturing Company (TSMC):
Taiwan-based TSMC has 6 nanometer technology in production already. There is widespread speculation that Intel will turn to it to manufacture its most advanced microprocessors.
TSMC manufactures chips for the vast majority of the leading fabless semiconductor companies including Advanced Micro Devices (AMD), Apple Inc., Broadcom Inc., Marvell, Nvidia, and Qualcomm.
US Technology Leadership Under Threat:
Semiconductor manufacturing technology is fundamental to all other computer and communications technologies. While the U.S. still has most of the leading chip design companies, there are very few leading semiconductor manufacturing facilities in the country. In fact, the US, which invented the chip technology, has slipped from being first in semiconductor manufacturing at the dawn of the industry to fifth in the world.
Recognizing the issue of foreign sourcing of critical technologies, the US has forced TSMC to start a fab in Arizona. But TSMC’s proposed fab in Arizona will have relatively small capacity, sufficient to meet only a fraction of the manufacturing demand of top companies like Apple, AMD, Marvell, Nvidia, etc. The US Congress is in the process of legislation that will provide greater incentives to companies to manufacture chips in the United States.
US-China Tech War:
TSMC is caught in the cross-fire of US-China technology war. Almost all major semiconductor manufacturers, including TSMC, rely on equipment made by US companies. The US government is attempting to leverage the dominance of US chipmaking equipment industry to shut out the Chinese technology companies.
US Commerce Department has recently announced that henceforth, any semiconductor chips made with equipment built by American companies cannot be sold to Huawei without prior approval and license from the DOC.
Silicon Valley tech giant has revealed that its smaller, faster 7-nanometer chipmaking technology is at least six months behind schedule and it would have to outsource manufacturing to keep its products competitive. The company has blamed the failure on its Indian-American chief engineer who has since been fired. What is at stake here is the US technology leadership because semiconductors are fundamental to all computers and communications products. Taiwan-based TSMC appears to be the biggest beneficiary of Intel's failure.