A recent report by Ctee highlights that Intel has significantly increased its orders with TSMC for its upcoming Lunar Lake and Arrow Lake SKUs. This move underscores Intel's determination to sustain its leadership in the CPU market despite internal struggles.

The decision, driven by the sluggish performance of Intel Foundry Services (IFS), marks a strategic pivot for the tech giant.

Intel's Arrow Lake "Core Ultra 200" series SKUs represent a milestone, as this is the first time the company has opted for an external foundry.

This decision aligns with Intel’s goal to rival AMD, which already uses TSMC's superior semiconductor quality. The use of TSMC's advanced manufacturing processes, combined with Intel's unique tile configuration and Foveros 3D packaging technology, signals Intel's intent to overcome its current limitations.

Despite the increased reliance on TSMC, concerns remain about Intel's future in the chip manufacturing business. With the anticipated integration of TSMC's 3nm process in their next-generation Falcon Shores AI GPUs, Intel’s evolving relationship with TSMC could turn the company into one of TSMC's dominant customers.

This raises questions about the long-term strategy for Intel's manufacturing division, with some analysts speculating a potential sell-off of the unit.

Intel's financial ambitions with Intel Foundry backfired, as rising operational costs and declining profits have taken a toll on the company.

Outsourcing to TSMC, while potentially more costly, may be a necessary step to ensure competitive positioning. However, this shift may lead to unexpected and decisive actions from Intel to mitigate these increased costs.

Meanwhile, Intel is grappling with delivering on its AI and data centre promises. With increased outsourcing and strategic partnerships, Intel aims to stabilise and regain its competitive edge in the fast-evolving semiconductor landscape.