Intel seeks to reduce manufacturing dependence on TSMC

Pat Gelsinger, CEO of Intel, announced plans to expand the production of new generation processor chips to help bring higher profits.

According to plan, more than 70% of the new generation Panther Lake processor chips on the Intel 18A process node (equivalent to 1.8 nm) launched next year will be manufactured at Intel's factory.

“Some of the Panther Lake chips are still being manufactured externally, but the majority are being produced internally,” Gelsinger said on a Nov. 1 earnings call with analysts and investors.

Outside Intel headquarters in California. Photo: Intel

Currently, all of Intel's flagship chips such as Arrow Lake and Lunar Lake for desktops and laptops are manufactured by TSMC, and then assembled by Intel using Foveros 3D packaging technology. This greatly affects Intel's profits, as it has to pay TSMC fees, while also competing with AMD and other rivals on price.

Another factor impacting Intel’s margins with Lunar Lake is the processing and packaging of memory on the chip, which increases assembly costs. As more designs are done in-house, the company’s margins are expected to improve.

With Panther Lake in 2025, Intel plans to manufacture the bulk of the CPU using the 18A process technology. By Nova Lake in 2026, only a few parts will be manufactured at TSMC.

“Some Nova Lake components will continue to be sourced externally, but the majority will be manufactured in-house,” Gelsinger said. This means some Nova Lake models will have higher margins for Intel.

Still, Gelsinger emphasized: "TSMC is a great partner. Lunar Lake has proven the strength of this partnership and we will continue to use it selectively in future product lines."