Intel gets confidence boost from anonymous customer pre-paying for 18A production

2 min readUpdated Jun 4, 2025Sep 4, 20235:47 AM

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Last week, Intel CEO Pat Gelsinger reiterated his goal for Intel to take foundry leadership from TSMC by 2025. The executive said, “We’re 2.5 years into the transformation. Now, it’s gone the way I would have expected at the time in terms of rebuilding the company. You have to be much less skeptical about our ability to pull this off.” Intel not only had to watch as TSMC took its foundry leadership away, but it also saw TSMC’s largest customer, Apple, replace its Intel chips with M-series chips built by TSMC.

During last week’s Deutsche Bank conference, Gelsinger stated that the 18A node will return process leadership to Intel. That node would be considered 1.8nm while TSMC and Samsung would be shipping at 2nm during the same time. The CEO also let it be known that Intel has received a large prepayment from a customer for Intel’s 18A capacity. This gives Intel the confidence to believe it is on the right track and will lead the company to speed up the build-out of 18A fabs.

In the long term, Intel sees the contract foundry business as its biggest opportunity. One interesting comment made by Gelsinger is that Intel knows TSMC’s wafer costs, ASPs, and targets. With this knowledge, he says that Intel wants lower costs than TSMC to win business from the global foundry leader. He says that Intel is trying to get its internal cost structure in line with TSMC. To this end, Intel will study its metrics such as headcount per wafer start, and use more AI/Machine Learning to improve efficiency.

Intel is still relying on TSMC to build parts of its next-generation ‘Meteor Lake’ chips. While Intel will use its Intel 4 node (7nm) to build the chip’s CPU tile, the GPU tile will use TSMC’s 5nm node. The chip’s SoC tile, an ultra-low-power tile that supports media, imaging, display, and the connection to memory, will be built on TSMC’s 6nm node as will the chip’s I/O Extender tile.

As Tech journalist Leo Waldock notes in a post on X, “All that could be correct yet it still seems weird to me that Intel is buying tiles from TSMC for its own products while touting foundry services to 3rd parties. Eat your own dog food, no?”

Will Intel make TSMC and Samsung Foundry squirm? Will Apple stay loyal to TSMC? Will geopolitical rumblings make TSMC customers worried enough to bring their business to another foundry? These are questions that we will have to wait to answer.

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Questions & Answers

What is the key factor giving Intel confidence that it is on the right path for 18A production?

Intel has received a large prepayment from a customer for its 18A capacity. This financial commitment leads the company to believe it is on the correct trajectory and will help accelerate the build-out of new 18A factories.

What strategy does Intel plan to use to compete with TSMC on cost for foundry services?

Intel plans to lower its costs to become more competitive than TSMC, using knowledge of TSMC’s wafer costs and ASPs. It intends to achieve this by studying metrics like headcount per wafer start and using AI/Machine Learning to boost efficiency.

Which parts of Intel's upcoming 'Meteor Lake' chips are still being manufactured by TSMC?

TSMC is manufacturing several components of Intel's 'Meteor Lake' chips. The GPU tile will use TSMC’s 5nm node, while the SoC tile and the I/O Extender tile will both be built on TSMC’s 6nm node.

What is Intel's ultimate goal for its contract foundry business?

Intel's long-term goal is to make the contract foundry business its biggest opportunity. CEO Pat Gelsinger aims for Intel to take foundry leadership from TSMC by 2025 by returning process leadership with the 18A node.

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