Pat Gelsinger, the former CEO of Intel, was wrong. This is the current of thought that is gaining the most strength. since leaving the company which he has led for almost four years, and the conclusion to which Morris Chang has arrived. The founder of TSMC not only knows the global semiconductor industry inside out; He also knows Pat Gelsinger personally.. And he maintains that he was wrong to focus on consolidating Intel as a manufacturer of integrated circuits for third parties instead of putting all his effort into designing chips for artificial intelligence (AI).

“I don’t know why Pat resigned (…) I don’t know if his strategy was bad or if he didn’t execute it well. He seemed to want to focus more on becoming an integrated circuit factory than on designing chips for AI. Of course, now it seems that should have turned to AI.” In this statement Morris Chang reflects on the decisions that seem to have dragged Intel into the difficult situation it finds itself in right now, but it is important that we do not overlook that for TSMC it would be bad news if Intel consolidates itself as a manufacturer of integrated circuits for third parties and managed to snatch away some of his clients.

The dilemma of Intel’s chip factories

In the middle of last September, just two and a half months before leaving Intel, Pat Gelsinger revealed that the company’s leadership was weighing the possibility of spin off its manufacturing business of semiconductors in a move very similar to that made by AMD in 2009. The latter company spun off its integrated circuit production subsidiary and created GlobalFoundries. Since then it has gone objectively well.

Gelsinger is already completely separated from Intel, but the possibility of separating the chip manufacturing subsidiary from the rest of the company is still on the table. However, as we explain to you at the end of November, if you finally decide to do it you will not have complete freedom. And it will not have it because it has contracted obligations with the US Government as a result of receiving the 7.86 billion dollars that the Department of Commerce will give it as a subsidy, and also the 3.5 billion dollars that it will receive from the Department of Defense to manufacture chips for military applications.

Intel’s commitment to the US Administration directly involves the spin-off of its semiconductor manufacturing division into an independent subsidiary. The US Government has asked Intel to maintain ownership of at least 50.1% of Intel Foundry if this business unit were to eventually separate and take the form of a new private legal entity. And, despite everything that has happened in the company during the last two weeks, as I mentioned a few lines above, this possibility is still on the table.

It is crucial for Intel to increase its competitiveness, and spinning off chip factories could help it achieve this. Dave Zinsner, the company’s chief financial officer, has declared that a possible formal separation of the manufacturing and product development divisions is a completely open question that Intel’s next leader will have to decide.

He will decide whether to go ahead with Gelsinger’s plan or, on the contrary, turn around. Right now it is difficult to predict what will happen, but, honestly, if I had to bet I would argue that the separation of the two parts of the company will occur. Fulfilling the commitments made with the US Administration, of course, but it will come.

Image | Intel

More information | SCMP