--- title: Intel’s $20B pivot could save the company, and help solve the chip shortage - The Hustle description: Intel spent $20B on a pivot that could save the company and help solve the chip shortage. image: https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/600207653-News-Brief_2021-10-24T235720.823Z.webp --- # Intel’s $20B pivot could save the company, and help solve the chip shortage ![Rob Litterst](https://thehustle.co/wp-content/uploads/2023/01/Rob-Litterst-pic.png?width=48&height=48&name=Rob-Litterst-pic.png) [Rob Litterst](https://hs-sbup.thehustle.co/author/rob-litterst) [Rob Litterst Twitter profile ](https://twitter.com/robbylit) Published: October 25, 2021 Updated: October 11, 2023 *Via Getty Images* ![Intel’s $20B pivot could save the company, and help solve the chip shortage](https://hs-sbup.thehustle.co/hs-fs/hubfs/The%20Hustle%20News/Assets/Images/600207653-News-Brief_2021-10-24T235720.823Z.webp?width=595&height=400&name=600207653-News-Brief_2021-10-24T235720.823Z.webp) At a basic level, there are a few ways to make money in the world of microchips: - **Producer:** Design microchips yourself and sell them to customers - **Foundry:** Manufacture chips according to customers’ designs Intel built an empire doing the former, continuously outpacing rivals with leading-edge designs. #### **Then, a combination of factors knocked it off this path:** 1. [Apple](https://thehustle.co/11102020-Apple-chip/), one of Intel’s biggest customers, began designing its own chips, and enlisted TSMC (Taiwan Semiconductor Manufacturing Company) to manufacture them 2. Intel experienced delays in its top chip launches in 2015 and 2017 3. Other companies followed Apple’s lead and began designing their own chips Fast forward to today, and **90%+** of state-of-the-art chips are made by TSMC, with the rest made by Samsung. #### **Intel wants to be a foundry, too…** … and they’re willing to pony up the cash to do so. The firm just [dropped](https://arstechnica.com/tech-policy/2021/10/intel-slipped-and-its-future-now-depends-on-making-everyone-elses-chips/) **$20B** on 2 new fabs (fabrication plants). The foundry strategy isn’t without challenges. Manufacturing chips has traditionally had low margins and requires massive scale to be successful. But once a firm reaches that scale (like TSMC), it creates a virtuous cycle: - More sales opportunities help perfect the manufacturing process - More customers lead to faster innovation #### **It will take time to tell if it’s working** Intel’s fabs will take ~2 years to build, and experts believe it will take 3-5 years to gauge whether the strategy will work. Notably, TSMC is an outlier, and its margins are boosted by government subsidies that are much higher than the US’s. Experts are still optimistic: The US needs computer chips, and global supply chain issues are proving it pays to have them domestically. If Intel can be the one to supply them, it may just return to its glory days. 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