Intel Corp.’s decision to consider outsourcing manufacturing heralds the end of an era in which the company, and the U.S., dominated the semiconductor industry. The move could reverberate well beyond Silicon Valley, influencing global trade and geopolitics.
The Santa Clara, California-based company has been the largest chipmaker for most of the past 30 years by combining the best designs with cutting-edge factories, several of which are still based in the U.S.
Most other U.S. chip companies shut or sold domestic plants years ago, and had other firms make the components, mostly in Asia. Intel held out, arguing that doing both improved each side of its operation and created better semiconductors. That strategy is in tatters now, with the company’s factories struggling to keep up with the latest 7-nanometer production process.
After Chief Executive Officer Bob Swan said Intel is considering outsourcing, the company’s shares slumped 16% on Friday, the most since March, when the stock market plummeted in the early days of the Covid-19 pandemic.