According to Kevin O'Buckley, senior vice president and general manager of Foundry Services at Intel Corporation, the road map for the development of Intel’s foundries looks like this: as demand from customers - that is, other semiconductor companies that want to produce at Intel foundries - grows, "Intel will upgrade the foundry in Oregon, in addition to the upgrade that it is currently carrying out in Arizona; and in the second stage - in Ohio, a semiconductor foundry that has not yet been inaugurated and the construction of which has been postponed," O'Buckley says. Only after that will Intel turn to boosting production outside the US. "As demand grows, we’ll expand beyond that. We have investments that will be made in Germany and Poland (two foundries construction of which is currently suspended - A. G.), and we have the ability to leverage and make decisions about using other existing sites such as Israel or Ireland."
When O'Buckley talks about improvement in demand, which for now, at least according to the company’s quarterly financials, remains stable at best - he doesn’t mean PCs or servers that incorporate Intel chips, but that more and more semiconductor companies that produce at rival company TSMC will choose to produce at Intel’s foundries, which are at the height of a process of organizational and cultural change. The aim is to change from a foundry that produces for Intel to one that has a service mindset that attracts the most prestigious companies, headed by Nvidia, Apple and Amazon.
O'Buckley, who came from outside Intel, and has spent most of his career at semiconductor company Marvell Technology and at GlobalFoundries, is meant to be the man who will bring in exactly these customers, customers that Intel would be delighted to sign up, as well as Marvell itself, which works closely with TSMC.
"The dynamics of the industry dictate a significant rise in demand for chips, and in particular double-digit growth in demand for advanced technologies. Intel’s CEO, Lip-Bu Tan, has said that the chip market will be a trillion dollars by 2030, which compares with $800 billion this year, and $600 billion in 2023," O'Buckley says.
Intel is talking about increasing production in the US as part of its desire to prove to President Trump that it is acting in line with his directives, but at the same time it talks about broad distribution of the value chain, at the request of its customers. How does that fit together, and should the fabs in Israel and Ireland be worried about it?
"The foundry in Ireland produces with three nanometer technology, which makes it the company that produces the most advanced chip in the EU. Ireland is a marvelously important installation for us, operating at the highest level, with the most advanced ultra-violet production machines. Increasing production at existing foundries requires lower investment - you don’t have to construct a new fab costing $30 billion, but what motivates us at the moment is to expand our capacity to new places with the new 18A production technology."
What about the fab in Israel?
"The foundry in Israel runs with seven and ten nanometer technology, and in order to increase production only a supplementary investment will be required."
Intel has been talking of splitting the development and production divisions for years, but the split has only been partially carried out. Is it now about to make the split?
"Intel will treat Intel Foundry as a supplier only. As customer manager of Intel’s foundries, Intel is now my customer. On the other hand, the semiconductor design division is undergoing a process whereby it will start to behave as a design company that does not have a production factory in its pocket, and that’s the separation journey that we are on at the moment. It’s separation between people and teams. Every employee needs to know his place and whom he serves. The business processes need to become separate - the financial systems, the computer systems. For example, if an Intel semiconductor designer approaches me, I’m going to negotiate on the price and production volume. That’s not something that comes naturally to Intel, but I’m sure that for Intel’s products to be amazing and for Intel’s foundry to be that way too, such separation is essential."
Intel’s production division was one of the few divisions that reported a rise in revenue in the company’s latest quarterly financials, up 7% in comparison with the corresponding quarter at $4.7 billion. Most of this, O'Buckley admits, was from manufacturing Intel chips. "The way I would describe this is that Intel is our number one customer, but I will treat it as any factory would treat a flagship customer," he says. "It’s true that we are subordinate to the same parent company, but I have to maintain my credibility and my service-orientation as someone who markets our production technology to companies that design chips, even those that compete with Intel’s chips."
Ready to collaborate
The day before the conversation with O'Buckley last week, Lip-Bu Tan revealed that the US government and the US Department of Defense had become a key customer for Intel at all stages of development and production, up to the packaging stage, an advantage not held by TSMC. Military customers do not always demand the newest technology, and can make do with less advanced components, such as the ten and twelve nanometer chips that Intel manufactures in any case, but the new partnership with the federal administration also focuses on the new, sophisticated 18A chip, which is meant to compete on at least equal terms with TSMC. "This is an investment meant to ensure that the US government and its customers will have access to advanced Western technology," O'Buckley declares.
Are you concerned about the tariffs policy hitting Intel’s exports to China, which today account for 30% of annual sales?
"I can’t comment on that specifically, but businesses don’t like obstacles to global trade. I understand that the US government has certain aims, and we like everyone else are simply trying to understand what needs to be done to run the business."
O'Buckley may refuse to comment explicitly on the tariffs issue, but at the annual conference of Intel’s Services Division in San Jose last week, where he hosted Chris Miller, the author of "Chip War", he mentioned that the chip market was expected to turn over a trillion dollars by 2023, and asked "What would that be with 145% added on?" He further commented that a rise in prices in the chip industry would be liable to lead to inflation.
To conclude, will there be a merger between Intel and TSMC in the future? We have heard about meetings between the CEOs of the two companies.
"TSMC is an important supplier to my customer - Intel’s products team. So it’s basically very healthy that this relationship should exist with its CEO. But from the point of view of a production factory, the aim is to ensure that I have technologies that compete with companies like it. Many of the technical changes we are making today will ensure that customers see us as a credible alternative to TSMC. We still have a great deal of work ahead of us in competing with it."
The author is a guest of Intel in San Jose
Published by Globes, Israel business news - en.globes.co.il - on May 5, 2025.
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