Intel Custom Foundry's 10nm meltdown is crushing a $20+B market cap tech giant
Exclusive: This is the beginning of a far reaching story
After extensive research, SemiAccurate can say this company cannot survive Intel's lack of delivery intact. The consequences of this are far reaching for both Intel and their customer.
We would like to start this out on a personal note, two actually. First and most importantly is this story makes us sick, it is going to mean the loss of thousands of jobs and the destruction of a once proud and innovative company, all because of executive stupidity. While we are just reporting the issue, it is still pretty horrible to watch and think about, our condolences to those affected but not to those involved at a high level.
Secondly this is by far the biggest story that SemiAccurate has yet to cover, and we have had some pretty big ones lately. It is pure business, bad management decisions, and some scary potential fallout. Technology only comes into it as far as Intel and their utter inability to produce a functional 10nm process after years of delay.
(Note: For more about SemiAccurate, see the paragraphs at the bottom of the article. We are putting it there to save our regular readers the recap.)
Vague Hints:
That said the current issue is the result of weeks of research, over a dozen talks with sources inside the involved companies, at competitors, suppliers, and in upstream and downstream industries. All pointed to the exact same problem and result, there is no ambiguity on this one among our sources. A massive $20+ billion market cap tech giant bet everything on Intel's 10nm process to get a leg up on the industry during an upcoming generational change. Intel has not announced this company as a Custom Foundry client either, and would not provide a list of current customers when SemiAccurate requested it last week.
As you know Intel's 10nm process is now years delayed, is not economically or technically viable, and is unlikely to ever work financially speaking based on what SemiAccurate understands of the problems Intel is still trying to fix. The customer in question put their entire upcoming line of chips at Intel on 10nm, and Intel failed. There was no Plan B, no out, and according to multiple sources, the customer in question can not survive. This is mainly due to a major industry transition that is going on now, the company in question will not have a product to sell into it.
This isn't a mom and pop company with a trivial product line, it is a foundational technology giant. They have been in business for decades and much of a sector depends on them. And as far as we can see they are dead. Without a product line for a major industry transition, they can not survive and will be acquired or simply die. There is no way out at this point.
Note: The following is analysis for professional level subscribers only.
Disclosures: Charlie Demerjian and Stone Arch Networking Services, Inc. have no consulting relationships, investment relationships, or hold any investment positions with any of the companies mentioned in this report.
About Us:
For those that don't follow SemiAccurate regularly, let us give you a bit of background both on Intel's 10nm woes and our history. When we exclusively reported that Intel had 10nm Cannon Lake silicon back, we also reported, "This is no ordinary early silicon issue, it is a serious and unexpected problem.", followed shortly by reports of extremely low yields.
Since then we have explained why Intel's 10nm is broken, partially anyway, revealed another 14nm device after Whiskey Lake, pointed out Intel's curious bending of phrases on the 10nm timetable, and gave you the timetable that Intel internally feels confident for 10nm. Please note this last bit should have a, "for now" because of the added 14nm parts effectively line up with the purported 10nm 'launch' and Intel is refusing to give Tier 1 OEMs guidance on which is real. Feel free to read into this as you will.
On the business side, SemiAccurate has also also had a long line of exclusive stories. Some of the recent ones include having correctly called the issues at Qualcomm's server division, announced that a customer dumped Intel Custom Foundry (Note: Intel has not acknowledged this publicly yet), exposed a potential $1B/year contra-revenue flow at Intel, and revealed Broadcom's dumping of their ARM server division and it's buyer.
This is a sampling of the semiconductor industry stories SemiAccurate has researched and exposed weeks or months before any other outlet picked them up. We aren't trying to pat ourselves on the back, just pointing our our track record because of the seriousness of the current story. Apologies to our regular readers for the rehash.S|A
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