Intel foundry’s ‘No. 1’ customer—U.S. DoD—targets GAA

The U.S. Department of Defense (DoD) is Intel Foundry Services’ (IFS’s) “No. 1” customer, IFS president Randhir Thakur told EE Times, noting that IFS plans to be part of the DoD state-of-the-art heterogeneous integrated packaging (SHIP) program. That program will necessitate deep knowledge of gate-all-around (GAA) technology facilitating high-transistor–density 3D chips.

Intel’s new foundry unit has an initial $250 million contract with the DoD to provide chip design and development. The next step, for a much larger and unnamed dollar figure, will include manufacturing if IFS can meet certain national security criteria, Thakur said in an interview on the sidelines of Intel’s latest fab project in Columbus, Ohio.

“They [the DoD] produce a few chips, but boy, they better work and be secure,” Thakur said. If IFS hits the stringent quality targets of the DoD, other customers will feel much more relaxed, he said.

There’s tremendous upside for IFS if the company can execute as a foundry, according to Bob O’Donnell, president of TECHnalysis Research: “The entire world recognizes that there’s this horrible geographic imbalance in where chips are made. There are very few companies in the world that can do chips at scale, and Intel is one of them. They have to prove that they can do it. It’s going to take a few years.”

The DoD business is worth about $3 billion a year, according to Thakur. IFS, established in March 2021, expects to have a home-court advantage against Asian rivals like Taiwan Semiconductor Manufacturing (TSMC) and Samsung Foundry.

The DoD needs to reduce dependence on overseas suppliers that are “in the shadow of China” and exposed to greater geopolitical risks, according to U.S. Deputy Secretary of Defense Kathleen Hicks.

“Approximately 98% of those commercial microelectronics that the DoD is so dependent on are assembled, packaged, and tested in Asia,” Hicks said in July at a White House event.

IFS won’t be the only foundry competing for the defense business. SkyWater Technology, a U.S. foundry that’s a trusted chip supplier for the DoD, this year announced plans for a $1.8 billion fab in Indiana.

IFS, which counts MediaTek, Amazon, and Cisco among its largest commercial customers, posted $800 million in revenue in its first year of operation. That figure is dwarfed by the $56.9 billion that top foundry TSMC made in 2021. MediaTek is also one of TSMC’s largest customers.

Intel’s acquisition of Tower Semiconductor this year will add customers and revenue to the IFS portfolio. Tower’s 2021 revenue from fabs located in Israel, Europe, the U.S., and Japan was about $1.5 billion.

After the Tower deal closes, IFS will add the metaverse to its key market segments that include high-performance computing, mobile, and automotive chips.

“They have the ability to supply chips in the AR/VR metaverse space,” Thakur said of Tower. “They have good capability on display and sensors.”

Aggressive technology roadmap offered

IFS is offering a technology roadmap that promises chip design customers some of the process nodes a few years from now.

“Intel 16 is essentially between 14 nm and 22 nm, so it’s a mature node,” Thakur said, using the Intel nomenclature for process nodes. “But Intel 18A is like 2 nm.”

IFS will offer Intel 18A in the second half of 2024. Intel has provided customers its 0.9 version process design kit (PDK) for Intel 16, meaning that the node is now manufacturable, according to Thakur. By the end of this year, the 18A PDK will be at version 0.5 — in the middle of development, but beyond the exploratory phase, he said.

With the Tower acquisition, IFS will also provide legacy nodes ranging from 0.5 µ to 65 nm.

The DoD is interested in using Intel’s most advanced technology when it’s available about two years from now.

“Our engagement is Intel 16, but also Intel 18A, which is gate-all-around,” Thakur said. With GAA, Intel will start making a new generation of high-density 3D chips that are a migration from 2D silicon.

IFS plans to be part of the DoD SHIP program, stitching together chiplets with Intel’s embedded multi-die interconnect bridge (EMIB) and Foveros 3D wafer-stacking technology.

Despite its home-court advantage in the U.S., Intel counts on Asia for its chip packaging and IC substrates. To reduce this supply chain vulnerability, IFS plans to move some of its packaging operations to its manufacturing site in Chandler, Arizona.

“We have about six different packaging companies in 18 different factories where we are producing substrates,” Thakur said. “We own the technology, and we develop it, so we know how to build it. Under some cases, we will have these things done in Arizona.”

He didn’t disclose a timeframe for the move to Arizona.

New customer corridors coming

At this point, IFS uses capacity in various Intel fabs and other manufacturing operations for its foundry customers.

IFS has created a production “corridor” for MediaTek, the world’s largest designer of chips for smartphones.

“It’s a certain thousand wafers per week in that corridor,” Thakur said. Even if parent Intel has a surge in orders, nobody can touch the capacity dedicated to MediaTek, he added. IFS is establishing new capacity corridors for customers, according to Jason Gorss, an IFS spokesperson.

Supply chain security

Thakur noted the many supply chain issues that foundry customers face internationally, including chips that are counterfeited and illegally repackaged.

Prior to joining Intel, he worked for memory maker SanDisk, where he was responsible for worldwide technology operations.

“We had to get some of the packaging done in China. One time, I went to Beijing with Eli Harari, the CEO of SanDisk at the time.”

Between meetings, they decided to visit the Great Wall of China.

“I carried a camera. We used to make those SD cards for cameras. We said, ‘We need an SD card,’ and we went out on the street, and there was SanDisk, SanDisk, SanDisk. The card said it would provide you 256 MB, but it only took three pictures. We put a compliance and counterfeit lawyer on it, and it became such a huge issue.”

Intel also depends on Asian facilities, including one Thakur mentioned in Malaysia for packaging.

It is secure, but going forward for the defense business, Chandler will be the new location for packaging, Thakur said.

Despite the geopolitical competition between China and the U.S. in the semiconductor industry, IFS will pursue customers everywhere. While the U.S. is expected to announce new red lines on exports of chip technology to China, Thakur points out that the nation accounts for about 20% of parent Intel’s business.

“That’s how these things get kind of ugly. We operate in an environment where these kinds of geopolitical uncertainties have increased.”

IFS must compete in the global foundry business with the big players, Thakur said.

The trick is to serve local markets as supply chains become less globalized and more isolated.

“The customer can be anywhere. Now the question becomes, when are you going to manufacture locally to serve them locally?”

IFS, as a latecomer to the foundry business that’s dominated by TSMC and Samsung, must find ways to differentiate itself, Thakur said.

He touted Intel’s expertise in architectures, including x86, ARM, and RISC-V, as well as packaging processes and even a chiplet studio that provides ready-made pieces for chip-design customers.