Whenever Intel attacks a new market, the chipmaker always starts small, sets expectations modestly, and feels its way along slowly. That's why everyone is taking today's very small, modest announcement that Intel will, for the first time, act as a foundry by selling a tiny sliver of fab capacity to another chipmaker, as a Big Deal. And it is a big deal—but maybe not in the way everyone thinks. First, let's take a look at the deal.
In a blog post that went up earlier today, Intel's Bill Kircos flagged an announcement by Achronix that the latter company would be making its field-programmable gate arrays (FPGAs) on Intel's upcoming 22nm process. Kircos was very careful to emphasize the small size of this deal:
"With Achronix," Kircos writes, "we are selectively offering access to our 22nm fabs. For perspective, this deal would only make up a tiny amount of our overall capacity, significantly less than one percent, and is not currently viewed as financially material to Intel’s earnings."
As for Achronix, the company makes FPGAs, a type of chip that can be rewired in software. FPGAs are typically made on very old, very slow process nodes, and are a relatively expensive way to do things. They're used in any niche where you either need the ability to rewire the chip once it's in service, or where your initial shipping volumes will be too small to support a dedicated fab effort.
Achronix's hook is that they make super-fast FPGAs on a leading-edge process, which is where Intel comes in. The company's current Speedster1 products run at a blazing 1.5GHz, and when Speedster22i comes out on Intel's 22nm process it will retain the 1.5GHz top-end clockspeed, but use 50 percent less power at a much cheaper price point.
In an interesting twist, The Register claims that Achronix's decision to use Intel was driven in part by national security considerations. We've reported extensively on the idea that chips fabbed overseas in insecure facilities could contain hidden kill switches or backdoors that would let an opponent cripple the US military, and Achronix allegedly wants to be able to sweeten its pitch to military customers by offering a home-grown solution.
Intel's angle: the farm team
A stable of foundry customers will give Intel a little bit of revenue and exposure to diverse semi markets, but more importantly, it will also give the chipmaker a farm team of fabless semi companies that it can purchase and then very easily integrate into its business.
Historically, Intel has shunned product ideas that it couldn't see generating some very large minimum amount in annual business. There are tons of products and markets that the chipmaker passes on, because it needs enormous volumes to justify the expense associated with developing a new product and then brining it to market. But if Intel can find a handful of small companies, like Achronix, one that don't compete with its core business and can share a big part of the risk associated with attacking a smaller market, then Intel can use a collection of niches to generate new cash out of its fabs. And if one or more of those niche companies really begins to take off, Intel can just buy them up and roll them right into its existing operation without a hiccup.
So in opening up just a little bit of its fab capacity to Achronix, Intel's gets to point its fabs at a new niche in a way that minimizes its downside. And if Achronix's upside grows to the point that Intel really takes an interest in getting a larger share of it, the chipmaker can just buy part or all of the smaller shop. Achronix, for its part, gets access to leading-edge fab tech that can help it stand out, the price of which is that it is placing all its eggs in Intel's basket. (Porting a product from one foundry's process to another is very costly and painful, which means Achronix is stuck with Intel; it's also what will make it easy for Intel to integrate Achronix should the larger chipmaker decide to purchase it).
Ultimately, while Intel is almost certain to do other foundry deals like the one announced today, we don't see the chipmaker actually pursuing a real foundry model like IBM—Intel likely intends to stay an integrated device manufacturer (IDM) forever. Rather, Achronix and deals like it will enable Intel to develop new markets with less downside risk, and will ultimately grow the company's IDM business through acquisitions.
Source: ars technica