With a keen interest in expanding the semiconductor supply chain beyond the aggregation of manufacturing in Asia, Intel Corp. signed an agreement with pure-play foundry United Microelectronics Corp. (UMC) to develop 12 nanometer semiconductor processes.
The combination of technologies from each company will provide a win-win.
Specifically, using UMC’s technological services combined with Intel’s existing fabs for joint operations will help expand Intel’s foundry business model. Simultaneously, the deal gives UMC the ability to leverage advanced manufacturing capabilities like FinFET without needing heavy investment capital.
The move also further diversifies the semiconductor supply chain to prevent potential future pandemics — such as when manufacturing was hindered by COVID-19 — or possible geopolitical issues.
According to Stuart Pann, senior VP and GM of Intel Foundry Services (IFS), the collaboration with UMC is another step toward Intel’s goal to becoming the second-largest foundry by 2030. Additionally, Intel is attempting to sway manufacturing on a global scale with plans to have the U.S. manufacture one-third of semiconductors globally.
"Taiwan has been a critical part of the Asian and global semiconductor and broader technology ecosystem for decades, and Intel is committed to collaborating with innovative companies in Taiwan, such as UMC, to help better serve global customers," Pann said.
Why it matters
According to market research firm TrendForce, the mutual benefit is not just regulated to the 10 nm process level but a potentially deeper and more extensive collaboration between the companies due to their respective expertise.
Given nearly every region in the world is working toward expanding domestic semiconductor manufacturing — Europe, U.S., Japan and already the staples in Korea, China and Taiwan — the alliance could be a game changer for both companies.
Intel is looking to bolster its own revenue baseline into an area it sees as ripe for expansion after the supply chain issues that happened from 2020 through 2022, particularly in certain sectors like automotive that were hit especially hard by semiconductor shortages related to COVID-19 lockdowns.
Intel has already pledged to build two new fabs in Ohio and is expanding its Ocotillo campus in Arizona with two other fabs that have already broken ground. It is also building out a new megafab in Magdeburg, Germany, to expand its operations in Europe. This is in addition to its newly opened 3D packaging fab in New Mexico, other facility expansions in Italy, Ireland and Oregon.
How it benefits UMC
The deal for UMC firstly allows it to leverage FinFET capacity without having to invest large amounts of capital. But it does more than that for the pure-play foundry including:
- Carve a niche in mature process market
- Expand its global footprint
- Diversify geopolitical risks
TrendForce said UMC will help not just assist in developing the 12 nm IP but play a role in helping Intel with foundry business negotiations. That will, in turn, allow UMC to distinguish itself in the mature process competition against China.
The collaboration will use the 12 nm FinFET process at Intel’s Chandler, Arizona megafab.
How it benefits Intel
Intel gains foundry market experience and the ability to focus on developing more advanced processes like 3 nm and 2 nm and using the decades of business experience UMC has.
Intel has been rapidly expanding IFS and TrendForce said this is the next step to meet the challenge of expanding to more advanced process technology and having a partner that has experience to do it.
TrendForce said that it is possible Intel will consider co-managing additional FinFET facilities with UMC and maybe expand sites like its Ireland Fab24 and Oregon’s D1B/D1C.
However, UMC has been developing its own 12 nm process for more than seven years and has not yet hit mass production. But the collaboration could allow it to accelerate this process.
Working with other foundries
Initially, Intel looked to shore up its mature process nodes by acquiring Israeli pure-play foundry Tower Semiconductor for $5.4 billion. However, the company ended that pursuit due to certain regulatory approvals not meeting deadlines.
Instead, Intel formed an agreement with Tower to provide 300 mm foundry service to Tower’s customers, specifically at its Fab 11x fab in Rio Rancho, New Mexico. The same spot that Intel just opened a new advanced 3D chip packaging site earlier this month. In return, Intel gained another capacity expansion for IFS including more mature process nodes that it currently doesn’t serve.
