Intel's inevitable foundry separation will trigger the largest supply chain realignment in semiconductor history, with early intelligence suggesting the split could happen as soon as Q3 2025—18 months ahead of public projections.
The Foundry Problem
Sources close to Intel's board describe a scenario where mounting pressure from activist investors and continued foundry losses force CEO Pat Gelsinger's hand. The foundry division, burning $7 billion annually, can't compete with TSMC while subsidizing Intel's design teams.
The core issue is structural: Intel's foundry division must simultaneously serve internal design teams (often at below-market rates) while competing for external customers against TSMC's superior manufacturing processes. This dual mandate creates an impossible optimization problem.
Prioritize internal needs and lose external customers, or serve external clients and starve internal design teams of capacity. The only solution: split into two independent companies.
The Split: Two Companies Emerge
| Entity | Focus | Est. Value | Revenue |
|---|---|---|---|
| Intel Design | CPU, GPU & AI Chip Design | $180B | $45B/year |
| Intel Foundry | Manufacturing & Process Tech | $50B | $18B/year |
The separation creates immediate winners and losers. AMD, currently dependent on TSMC, could become Intel Foundry's anchor customer, potentially securing 40% of capacity through a rumored $30 billion, five-year deal.
But the real fireworks start when Intel Design, freed from internal foundry obligations, begins shopping for external manufacturing. TSMC can't absorb Intel's entire product line without displacing other customers.
"This split would trigger the largest supply chain realignment in semiconductor history. Every major partnership will need to be renegotiated."
— Senior semiconductor industry analyst
Winners and Losers
| Company | Impact | Reason |
|---|---|---|
| AMD | +45% | Secures Intel Foundry capacity, reduces TSMC dependency |
| GlobalFoundries | +30% | Gains relevance as alternative foundry option |
| TSMC | -15% | Loses Intel Design business, capacity constraints |
| Samsung | -20% | Faces increased competition from stronger Intel Foundry |
The Financial Reality
Industry analysts project that Intel Design would immediately become TSMC's largest customer, requiring 25-30% of Taiwan's advanced node capacity. This demand surge would force price increases across TSMC's entire customer base.
The $8.5 billion in CHIPS Act funding hangs in the balance, as federal agreements require Intel to maintain vertical integration to qualify for these subsidies. The split could force renegotiation of these critical government partnerships.
The rumored $30 billion AMD-Intel Foundry deal could serve as the financial anchor that makes the split viable, providing revenue stability while giving AMD crucial manufacturing diversification.
Looking Ahead
The Intel split isn't just corporate restructuring—it's a preview of how the semiconductor industry will evolve as AI demand strains existing manufacturing relationships. The $500 billion spending realignment represents the largest semiconductor market shift since the personal computer revolution.
For companies outside the Big Five, the split creates both opportunities and threats. Access to Intel Foundry's advanced manufacturing could level the playing field, while the disruption to established supply chains creates uncertainty that could persist for years.