Intel Launches New ASIC Business to Cater to Diverse External Customers, Highlighting Major Opportunities for Foundry & x86 Ecosystem

Intel Corporation is embarking on an ambitious journey within the domain of Application-Specific Integrated Circuits (ASICs) as a pivotal addition to its strategic initiatives. CEO Lip-Bu Tan has highlighted the significance of this venture, indicating that it will be instrumental in reshaping the company’s operational landscape.

Exploring Intel’s ASIC Business: A Comprehensive Solution for Technology Giants

Recently, Intel announced the formation of the Central Engineering Group (CEG), a move aimed at unifying its engineering talent into a cohesive unit. This new department, led by industry veteran Srini Iyengar, is poised to empower engineers within the organization significantly. While the CEG may not appear central at first glance, insights from CEO Lip-Bu Tan suggest it could open up new revenue channels for Intel and help rectify previous missteps associated with the AI hype.

“In addition and just as important, the [CEG] group will spearhead the build-out of our new ASIC and design service business to deliver purpose-built silicon for a broad range of external customers. This will not only extend the reach of our core x86 IP but also leverage our design strength to deliver an array of solutions from general purpose to fixed-function computing.”- Intel’s CEO Lip-Bu Tan at Q3 earnings call

Despite the complexity of the situation, let’s break it down. Currently, Intel lacks a robust product range for AI customers, with the anticipated Jaguar Shores AI “rack-scale”accelerator set to make its entrance in 2027. In the meantime, competitors like NVIDIA and AMD have established well-defined AI hardware portfolios, leaving Intel at a disadvantage. This is precisely where the CEG’s ASIC ambitions come into play.

Intel possesses invaluable assets: renowned silicon expertise, x86 intellectual property, and an integrated foundry capable of manufacturing services. This combination positions Intel as a unique “one-stop shop”for companies seeking tailored AI silicon solutions—a capability few other ASIC designers can claim, including Broadcom, Marvell, or Alchip. Centralizing the CEG has diminished the complexities of connecting design services with manufacturing and packaging, significantly enhancing operational efficiency.

President Trump wants Intel's CEO to resign — Image Credits: Intel

Moreover, there are ample prospects within the AI supply chain, including revenue generated from high-volume manufacturing and design fees for ASICs. Notably, Lip-Bu Tan’s extensive background in promoting custom silicon business models during his tenure at Cadence equips him with the necessary experience and connections to navigate the current market and embrace the burgeoning “ASIC hype.”

This is why the potential success of Intel’s custom silicon initiative could signify a transformative phase for the company, positioning it as a system foundry responsible for managing every aspect of the supply chain. However, achieving this goal will not be without challenges, particularly given the fierce competition from ASIC designers like Broadcom. The next steps for Intel will be critical as it seeks to harness this opportunity in an evolving landscape.

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