<p><em>DigiTimes</em> reported on Wednesday that <strong>Nvidia</strong> is planning to tap <strong>Intel</strong>'s <span class="ticker-mention inline-flex items-center font-bold">(INTC <span class="ml-1 text-red-900">0.95%</span>)</span> foundry for some manufacturing and advanced packaging needs beginning in 2028. Nothing has been confirmed, so this remains in the realm of rumors and speculation. However, it does line up with comments made by Intel management during the fourth-quarter earnings call.</p>
<p>If this Nvidia rumor is true, Intel's foundry business will get a significant boost from the king of AI chips.</p>
<div><img alt="Intel employees in a factory." width="880" height="528" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NTM1NzMvaW5zaWRlLWludGVsLWZhY3RvcnktdHdvLXBlb3BsZS1pbi1sYWItZ2Vhci13YWxraW5nX2ludGVsLTIuanBnJnc9Mzg0MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NTM1NzMvaW5zaWRlLWludGVsLWZhY3RvcnktdHdvLXBlb3BsZS1pbi1sYWItZ2Vhci13YWxraW5nX2ludGVsLTIuanBnJnc9Mzg0MA"/>
<p>Image source: Intel.</p>
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<h2>A mix of wafers and packaging</h2>
<p>DigiTimes reports that Nvidia is eyeing Intel Foundry for its Feynman generation of GPUs, which is set to debut in 2028. Given supply constraints at foundry leader <strong>TSMC</strong>, it would certainly make sense for Nvidia to seek alternative manufacturers.</p>
<p>According to the report, Intel won't be manufacturing the GPU compute die. That highly complex part of the chip will stay with TSMC. The plan is for Nvidia to use the Intel 18A process, or potentially the upcoming Intel 14A process, for portions of the I/O die. The report notes that this is all contingent on yield improvements for these processes.</p>
<p>The I/O die contains memory controllers and handles inter-chip connectivity. It's not as performance-critical as the GPU compute die, but it still requires an advanced process. Intel will reportedly also handle a portion of the advanced packaging needs for the Feynman family of GPUs. Intel's EMIB technology will be used for up to 25% of chips, with TSMC used for the rest.</p><div><div id="foolcom_sidebar_top_container"></div></div>
<p>For Nvidia, there's a strong incentive to reduce its reliance on TSMC while shifting some production to the U.S. This deal, if it's more than just a rumor, could act as a test run for Nvidia as it considers moving more manufacturing business to Intel down the road.</p><div><div><div><div></div></div></div></div>
<h2>Intel's advanced packaging opportunity</h2>
<p>During Intel's fourth-quarter earnings call, CFO David Zinsner gave a surprising assessment of Intel's advanced packaging opportunity. Zinsner said he had previously expected individual advanced packaging deals to be worth no more than a few hundred million dollars. That's no longer the case. &#34;I'd say some of the early customer engagements suggest that we'll be well north of $1 billion on many of these opportunities for advanced packaging. So they're way more exciting than even I had expected,&#34; Zinsner said.</p><div><div id="in_line_article_pitch_container"></div></div>
<p>That lines up with the Nvidia rumor. If Nvidia does end up using Intel for a quarter of its advanced packaging needs in 2028, it would almost certainly be a $1+ billion deal for Intel. Zinsner's comments suggest that multiple potential advanced packaging customers are engaging with Intel, so this could be a multi-billion-dollar opportunity overall.</p>
<p>TSMC offers its CoWoS advanced packaging services, but supply is reportedly being outpaced by demand amid the AI boom. For Intel, advanced packaging could be an effective way to bring foundry customers in the door. Once those customers are comfortable with Intel as an advanced packaging supplier, they could expand the relationship to also include some semiconductor manufacturing.</p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Intel Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0lOVEMucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0lOVEMucG5nJnc9MTI4"/></div><div><h2>NASDAQ: INTC</h2><div>Intel</div></div></div><div><div><div>Today's Change</div><div>(-0.95%) $-0.47</div><div>Current Price</div><div>$48.31</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$244B</div><div>Day's Range</div><div>$46.99 - $48.57</div><div>52wk Range</div><div>$17.66 - $54.60</div><div>Volume</div><div>3.5M</div><div>Avg Vol</div><div>98M</div><div>Gross Margin</div><div>34.77%</div></div></div></div></section>
<h2>Momentum appears to be building for Intel Foundry</h2>
<p>In addition to the Nvidia rumor, analysts appear confident that <strong>Apple</strong> will use Intel 18A from some M-series chips and potentially Intel 14A for some future iPhone chips. Packaging revenue will likely arrive sooner than manufacturing revenue, but either way, these potential deals are a positive sign for Intel's foundry ambitions.</p>
<p>Intel needs meaningful external customers for its foundry to justify the massive expense associated with keeping up with TSMC. The company may not be able to announce customer wins, depending on its agreements, but there will certainly be signs. Recent hiring at Intel's in-construction Ohio fab complex, which is set to be used for the Intel 14A node, suggests the company is becoming more confident in securing orders.</p>
<p>Investors should remember that the DigiTimes report has not been confirmed, and that any potential deal with Nvidia could fall through. However, this rumor is unequivocally good news for Intel.</p><div id="article_pitch_container"></div><div id="promobox_container"></div>

On October 26th, after the U.S. stock market closed, chip giant Intel released its Q3 2023 financial report. The report showed that Intel's total revenue in the third quarter fell 8% year-on-year to $14.16 billion, marking the seventh consecutive quarter of declining sales, although it was still higher than the market expectation of $13.53 billion. In the second quarter, revenue had previously dropped 15% year-on-year, and the company expects revenue to return to growth in the fourth quarter. However, the sales of the Network and Edge Group (NEX), which includes IoT and other segments, fell 32% year-on-year to $1.5 billion. More importantly, the server chip division, named "Data Center and Artificial Intelligence," has yet to recover growth, with third-quarter revenue declining 10% year-on-year to $3.8 billion. Facing multiple competitive pressures, do you think Intel can turn the tide in the AI era?

<p><span style="background-color:rgb(255,255,255);color:rgba(0,0,0,0.9);">On October 26th, after the U.S. stock market closed, chip giant Intel released its Q3 2023 financial report. The report showed that Intel's total revenue in the third quarter fell 8% year-on-year to $14.16 billion, marking the seventh consecutive quarter of declining sales, although it was still higher than the market expectation of $13.53 billion. In the second quarter, revenue had previously dropped 15% year-on-year, and the company expects revenue to return to growth in the fourth quarter.</span></p><p> </p><p style="margin-left:0px;"><span style="background-color:rgb(255,255,255);color:rgba(0,0,0,0.9);">However, the sales of the Network and Edge Group (NEX), which includes IoT and other segments, fell 32% year-on-year to $1.5 billion.</span> More importantly, the server chip division, named "Data Center and Artificial Intelligence," has yet to recover growth<span style="background-color:rgb(255,255,255);color:rgba(0,0,0,0.9);">, with third-quarter revenue declining 10% year-on-year to $3.8 billion.</span></p><p style="margin-left:0px;"> </p><p style="margin-left:0px;"><span style="background-color:rgb(255,255,255);color:rgba(0,0,0,0.9);">Facing multiple competitive pressures, do you think Intel can turn the tide in the AI era?</span></p>

In the AI era, can Intel win a comeback?

<p>DigiTimes reported that Nvidia plans to utilize Intel's foundry for manufacturing and packaging needs starting in 2028, contingent on yield improvements. This could significantly boost Intel's foundry business, especially if Nvidia uses Intel's 18A and 14A processes for its Feynman generation GPUs. Intel's CFO indicated that advanced packaging deals could exceed $1 billion, aligning with Nvidia's potential engagement. Analysts also suggest Apple may use Intel's processes for future chips, indicating growing confidence in Intel's foundry ambitions. However, the report remains unconfirmed, and the deal could fall through.</p>

- Nvidia is reportedly considering Intel's foundry for its Feynman generation of GPUs starting in 2028, driven by supply constraints at TSMC.  
- The arrangement may involve Intel handling up to 25% of advanced packaging, potentially leading to a multi-billion-dollar deal for the company if realized.  
- Intel's CFO indicated optimistic growth in advanced packaging opportunities, aligning with potential engagements from Nvidia and other customers, enhancing Intel's foundry prospects.

Nvidia's Next-Gen GPU Could be Coming to Intel Foundry