Intel Reportedly Lost a Steep Discount at TSMC With Dismissive Comments About Taiwan

A new report from Reuters is shedding light on behind-the-scenes tensions between Intel and TSMC that might have caused a rift. Intel has been using TSMC to fab some of its chips for several years now and is using it exclusively for its current desktop and mobile architectures. Apparently, it's paying full price for those wafers, thanks to comments made by its CEO, Pat Gelsinger.

The Reuters report says it's based on four sources who have knowledge of an arrangement between the two companies, which included a hefty discount on 3nm wafers. Reuters says TSMC was offering Intel a steep 40% discount on the the wafers, which it says cost Intel $23,000 each. That deal was being floated until Gelsinger made disparaging comments about Taiwan in May 2021, when he said, "You don't want all of your eggs in the basket of a Taiwan fab." He then doubled down in December of that year by stating, "Taiwan is not a stable place," seemingly referring to the geopolitical tensions with China as he also contrasted TSMC with Samsung in Korea and Intel in the US.

Those comments were allegedly enough for TSMC to cancel the deal, which then required Intel to pay full price for each wafer. It's currently using TSMC's 3nm process for both its Core Ultra 200 series desktop and upcoming 200H-series mobile CPUs, and its Lunar Lake Core Ultra 200V CPUs, so TSMC is likely making a lot of chips for Intel right now and will continue to do so into 2025 as well. It's the first time Intel has had all of its client-focused chips made by one of its competitors in the foundry business. By losing the previously offered deal, Intel has to pay more for each wafer, which cuts deeply into its margins.

TSMC founder Morris Chang sort of responded to Gelsinger's comments in 2021, calling him "very discourteous," but his comments were in regards to a meeting he had with him around the same time frame. He also described Gelsinger as "a bit cocky," saying he would deal with him the same way Gelsinger dealt with TSMC, which sounds like a reference to a bare-knuckles business arrangement. He added that he was initially impressed by Gelsinger's intelligence when he was the CEO of VMWare, but that he said his goal of building a complete semiconductor supply chain in the United States would not be possible.

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