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Technology: Intel Shocks by Considering Outsourcing

By Dick Weisinger

Intel has been struggling with further miniaturizations of chips. Initially they announced that the 10-nanometer scale chips would be available in 2017, but only now have they been able to reliably mass produce chips of that size. Next up are 7-nanometer sized chips, but Intel says that their production will be delayed another year.

On a recent briefing call, Bob Swan, Intel CEO, talked about outsourcing the manufacture of their chips, with Taiwan’s TSMC the likely partner to get the job. Analysts were shocked and Intel’s share price dropped 16 percent.

Analysts like Stacy Rasgon at Sanford C. Bernstein criticized the announcement: “You didn’t need to read any more. Whatever little credibility they had is out of the window.”

For the last 30 years, Intel has been the largest chip maker and manufactured their own cutting-edge designs.

Chris Caso, an analyst at Raymond James, said that “we view the roadmap missteps to be a stunning failure for a company once known for flawless execution, and could well represent the end of Intel’s computing dominance.”

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