Nvidia and other major United States tech companies are reportedly looking into using Intel Foundry Services (IFS) for their semiconductor needs. This consideration comes because TSMC, which they currently rely on for semiconductor contract manufacturing and packaging, is experiencing a shortage in production capacity.
In simpler terms, these tech giants are thinking about outsourcing some of their semiconductor production to Intel because TSMC, their usual supplier, can’t keep up with the high demand.
Since packaging technology is considered a key strength for foundry companies, there are criticisms that Samsung Electronics, currently facing challenges in attracting customers, needs to make a concerted effort to secure more orders.
According to Taiwanese media, Nvidia and other major U.S. tech companies are considering outsourcing packaging solutions to Intel. Despite the soaring demand for AI accelerators, TSMC alone cannot handle the production volume. Currently, TSMC virtually monopolizes the production of Nvidia products, which dominate the AI accelerator market share.
Although TSMC is aggressively investing in facilities to meet customer demand, but it still lacks sufficient production capacity.
Many worry that TSMC’s advanced processes, such as the 3-nanometer (nm) node and high-specification semiconductor packaging services, will fall short of demand at least until next year. Major customers, including Nvidia and Apple, have reportedly pre-booked TSMC’s 3nm production capacity until 2026, leading to a backlog of foundry orders.
Therefore, the industry views that US tech companies needing alternatives are turning to Intel Foundry, which possesses packaging technology similar to TSMC’s.
Multiple Taiwanese media outlets have reported that because TSMC’s CoWoS-S and Intel’s Foveros packaging technologies are similar, switching to Intel allows companies to quickly secure the necessary volume. They also mentioned that in addition to Nvidia and Microsoft (MS), Amazon (AWS) and Cisco are considering outsourcing to Intel Foundry to reduce their dependence on TSMC.
TSMC and Intel offer advanced packaging services to customers under the names CoWoS and Foveros, respectively. Both CoWoS and Foveros are packaging technologies that connect two or more semiconductor chips on a wafer before placing them on a package substrate.
Intel, which introduced its proprietary packaging technology ‘Foveros’ at the end of 2018, is now using ‘Foveros Omni’ and ‘Foveros Direct’ in mass production to enhance the performance and power efficiency of semiconductors.
Experts also advise that as many big tech companies are looking for alternatives to TSMC, Samsung must put in maximum effort to secure customers.
Kim Hak-sung, head of Hanyang Institute of Smart Semiconductor, said, “Packaging is a technology that critically influences customer acquisition in the AI semiconductor era, where various types of chips are interconnected.”
He added that while there may not be a significant difference in technical capabilities between Samsung Electronics and Intel, as mass production experience accumulates, the process stabilizes and becomes more attractive to customers. Therefore, to enhance competitiveness, Samsung must strive to secure the volumes that TSMC cannot handle, ahead of Intel.
