Intel CEO reminds investors it provides TSMC with chipmaking equipment — Gelsinger emphasizes that TSMC is a strategic partner

Although it is strategically vital for Intel to bring back the production of its chips to its fabs, the company admits that TSMC is a strategic partner that makes some of its most important products, such as the Core Ultra 200V (codenamed Lunar Lake) processors. Intel even supplies equipment to TSMC, as Pat Gelsinger, chief executive of Intel, highlighted in an interview with Yahoo! Finance.

“TSMC is an awesome company, they serve their customers well and they serve us well,” Gelsinger said. “Lunar Lake, the AI PC [platform] we spoke about, we could not do it, without TSMC. […] That said, we are a customer, a competitor, we also collaborate with TSMC on industry standards, this idea of advanced packaging with chiplets from TSMC and Intel, which is super important that we work together.”

Gelsinger continued, “Finally, I supply them with some of our advanced equipment. It is a complex relationship, which is important for Intel, for TSMC, and for the industry. I am grateful to the many things that we do with them and for them. I look forward for this to last many, many years into the future.”

The advanced pieces of equipment that Pat Gelsinger mentioned are IMS Nanofabrication multi e-beam photomask writing tools, which are crucially important in the EUV era. Using multiple e-beams to write a photomask significantly speeds up photomask production, a critical advancement because photomasks degrade more quickly with EUV lithography. 

Also, these multi-beam tools enable manufacturers like Intel and TSMC to quickly fine-tune photomasks, helping to improve yield, reduce performance variability, and enhance overall performance. In the future, these tools are expected to be essential for producing photomasks for new technology nodes utilizing High-NA EUV lithography.

One reason Brian Sozzi of Yahoo! Finance asked Pat Gelsinger about the relationship with TSMC is a Reuters report that said Intel lost a discount at TSMC due to comments made by the CEO of Intel, severely damaging the relationship between the two companies.

Intel reportedly had an advantageous arrangement with TSMC, where the Taiwanese manufacturer offered significant discounts, about 40% off the $23,000 price per wafer processed using a 3nm-class manufacturing technology. Gelsinger’s comments on Taiwan’s political vulnerabilities and suggestions that TSMC was not a stable manufacturing hub offended TSMC.

These remarks led TSMC to revoke the discount, forcing Intel to pay the full production price and cutting its profit margins. After Intel’s Lunar Lake ceased to be a niche product and Intel ramped up its production significantly, the lack of the discount is expected to greatly affect the company’s gross margin in general, which is a big deal.

Although Pat Gelsinger did not specifically address the report, he did say that the relationship with TSMC was ‘professional’ and indicated mutual reliance between the two companies.