Intel CEO Lip-Bu Tan Could Revitalize Company’s Glass Substrate Packaging Division With Samsung Investment, Report Suggests

This article does not constitute investment advice. The author currently holds no shares in any of the stocks referenced.

Samsung Chairman’s US Visit: A Possible Investment Opportunity in Intel

Lee Jae-Yong, the chairman of Samsung, is currently on a visit to the United States, sparking speculation among industry insiders in Korea about a potential investment in Intel’s struggling packaging division. Recently, Intel’s stock prices saw an uptick after the US government announced a stake in the company, and sources indicate that Samsung’s financial involvement aims to strengthen Intel’s competitive stance against TSMC, which has made significant investments in packaging technologies to meet rising AI demands.

Intel’s and TSMC’s Role in Advanced Chip Manufacturing and AI Supply Chain

Intel and TSMC stand out as the only two high-end chip manufacturers globally with the capability to perform advanced back-end-of-the-line (BEOL) chip manufacturing. BEOL technologies are essential for integrating finished chips with memory and other vital components, playing a crucial role in the AI supply chain. These AI GPUs and accelerators demand considerable power and must be expertly packaged to function effectively and evade malfunctions.

Potential Strategic Partnership Between Intel and Samsung

According to reports from Business Post, Samsung is keen to partner with Intel due to the latter’s expertise in advanced hybrid bonding packaging, especially as it strives to improve its production share in the global chip market. A significant factor in Samsung’s interest is that it trails Intel when combining back-end and front-end chip production market shares.

CoWoS Package — A CoWoS package illustrated by TSMC. Image: TSMC

Intel’s Glass Substrate Technology and Strategic Direction

Reports indicate that Intel is working on licensing its glass substrate technology to enhance its revenue streams. The company has been producing these substrates for multiple years, and the recent addition of a key executive to Samsung, known for their glass substrate experience, lends further credence to an impending partnership. However, there are circulating rumors that Intel may discontinue its investments in glass substrate development, which could signal an effort to raise capital for necessary research and development.

Such a strategic decision could enable Intel to maintain its competitive edge in a field it has long dominated while concurrently focusing on revitalizing its struggling foundry business without inflating expenses. Industry watchers speculate that a collaboration might emerge in the form of a joint venture or an equity investment by Samsung in Intel, similar to past moves by Softbank and the US government.

Collaborative Benefits: Competing with TSMC

A partnership between Intel and Samsung could position both companies favorably against TSMC, the world’s leading contract chip manufacturer, which commands a vast market share. While Samsung, unlike Intel, provides cutting-edge chip manufacturing technologies to third-party clients, it has struggled with disappointing yields and scalability issues when fulfilling orders, thus falling behind TSMC.

By collaborating, Intel could tap into Samsung’s advanced contract chip production capabilities, while Samsung would benefit from Intel’s established lead in the packaging sector, ultimately enhancing their competitive landscape in the semiconductor market.

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