Intel Corp. (NASDAQ: INTC) is stepping up its push into advanced chip packaging as it seeks to challenge Taiwan Semiconductor Manufacturing Company Ltd.'s (NYSE: TSM) dominant position in a fast-growing AI hardware market where demand for more efficient links between processors and memory continues to rise. Counterpoint Research analyst Neil Shah sees Intel's chip-packaging strategy as a potential way to challenge Taiwan Semiconductor in the fast-growing AI hardware market, although he believes Intel still needs strong execution, customer support and manufacturing scale to close the gap.
Intel Targets a New AI Battleground
Shah said on Tuesday that he expects more than 130 million GPUs and custom AI accelerators to ship with advanced memory packaging over the next five years, generating nearly $2 trillion in computing revenue.
In his view, competition is increasingly shifting from simply making smaller chips toward finding better ways to connect processors, memory and other components.
That shift matters because AI systems need faster access to memory, more computing power and more efficient connections.
Shah sees these constraints as creating opportunities for companies to improve how the different parts of an AI system work together.
Intel Builds Alternatives to Taiwan Semiconductor
Intel is developing three approaches to compete in this area.
Its EMIB technology already operates commercially, while Z-Angle Memory (ZAM), developed with SoftBank Group Corp's (OTC: SFTBY) SAIMEMORY, targets newer high-speed memory systems.
Intel is also developing Cross-Batch Memory (XBM) as a longer-term approach to redesigning the connection between processors and memory.
Shah sees an opening because Taiwan Semiconductor's widely used Chip-on-Wafer-on-Substrate (CoWoS) technology can involve high costs, manufacturing risks, capacity constraints and costly waste when production problems occur.
Taiwan Semiconductor Still Holds the Advantage
Despite Intel's opportunity, Shah said Taiwan Semiconductor retains the stronger position because it leads in large-scale manufacturing, has a more mature technology platform and benefits from broad industry adoption.
Intel's ability to mount a serious challenge will therefore depend on whether it can deliver its technologies on schedule, attract major customers and memory suppliers, and overcome heat and integration challenges.
Shah's broader view is that packaging will become an increasingly important battleground in the competitive landscape as AI systems demand more tightly integrated processors and memory.
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Price Action
INTC Stock Price Activity: Intel shares were trading higher by 1.02% at $97.67 during premarket trading on Wednesday, according to Benzinga Pro data.