Nearshore Americas

Intel to Outsource Chip Production to an Asian Rival

American chipmaker Intel Corp is preparing to outsource the advanced manufacturing of its microprocessors to an Asian rival, placing the future of 21,000 employees at its Oregon campus into doubt.

The outsourcing deal with Taiwan Semiconductor Manufacturing Co (TSMC) is likely to be finalized by early next year, according to the company’s CEO Bob Swan, who revealed the plan in a conference call with Wall Street analysts recently.

Intel has long outsourced one-fifth of its production, but the latest plan is likely to leave thousands of American jobs in jeopardy, particularly in Oregon, where the chipmaker is the largest private-sector employer and also among the biggest beneficiaries of the state’s tax incentives.

More than anything else, Intel’s research labs in Oregon play a key role in developing a new generation of microprocessors. The silicon valley firm has not disclosed the precise reason for this outsourcing.

However, some analysts say defective manufacturing at some of its US units led the company to move its manufacturing overseas.

The Silicon Valley firm has, however, made it clear that it would maintain its US manufacturing units involved in “internal production”.

Intel similarly shocked Costa Rica in 2014, when it shifted its microprocessor plant in the Central American country to Malaysia, laying off as many as 1,500 employees.

Sign up for our Nearshore Americas newsletter:

Chipmakers spend much of their money on the equipment that helps build microprocessors rather than employees. Therefore, the Taiwanese firm may end up manufacturing the chips inside the United States rather than in Asia.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

1 comment

  • Sounds like MBAism to me. Step 1 Let a vendor do the dirty manufacturing. Increasing our profitability as we no longer have to factor in the cost of equipmemt. Step 2 Let the vendor do the design as he can optimize design around the production equipment. Further increasing profitability. Step 3 or so, Intel who? A historic company that used to make somthing something or other (Like Xerox, Kodak, Sears, RCA, Wang, etc, etc.