TSMC ecosystem

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"One thing that mobile did is it created the scale to the TSMC ecosystem, which was all of the support entities and then it created what I would call intelligent, fabless players that worked with TSMC to get their capabilities to the level that, you know, it became kind of self-reinforcing," said George Davis, CFO of Intel. "We come into the market now in a situation where competitors have the benefit of all of that."

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TSMC executed perfectly and introduced a new process technology for its clients every year, EDA tool vendors supported these nodes with a new set of tools, mobile SoC vendors churned out new products every year. This is when the ecosystem essentially became self-reinforcing.

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Delaying a new node by a year or even more is not a big problem for an IDM in normal situations and this has happened to Intel, Samsung, Texas Instruments, and others without causing any significant problems. The problem for Intel is that, given its size, it has to compete against multiple companies at once: AMD, Nvidia, Xilinx, Broadcom and Samsung, just to name a few. And when all these companies can take advantage of the self-reinforcing foundry ecosystem, but Intel cannot, it finds itself in an unfavorable position.  

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Pat Gelsinger wants all of Intel's products to be the best and, to get there, he wants to make them using the most suitable process technologies. But to be able to outsource something to TSMC, its design must be developed using industry-standard tools designed for TSMC's production technologies.