Intel claims the fabless model is failing -

Any arguments for chip makers not to make their own chips are fast falling by the wayside, according to Chipzilla.

While it is still expensive to build, own and operate fabs, Intel which happens to own rather a lot of them, claims that as process technologies get thinner and processors more sophisticated, the pure play foundry model may fail.

But Intel's Mark Bohr,who is the  director of process architecture & integration and senior fellow of technology and manufacturing group at Intel, told EETimes  that the foundry model is collapsing. Chipmakers like Qualcomm will not be able to use TSMC's single 20nm process.

TSMC recently announced that it would offer only one version of 22nm process technology that would be aimed at both low-power and high-performance devices.

But Intel, which has been manufacturing commercial chips using 22nm process technology for several months, claims that it can create a version of the 22nm manufacturing technology for system-on-chip devices.

It can only do that because it can get under the bonnet of the fabrication processes for chip design. This is not possible for contract chipmakers who need to have a "one size fits all" system.

Bohr claimed that the fact that Intel was an integrated device manufacturer really helps it solve the problems dealing with devices this small and complex.

He thinks that far too many chip designers are fabless, which means that contract makers of semiconductors will have to ensure the best possible process technologies in order to stay competitive.

As a result, process technologies will get better and the foundry industry will prosper in the coming decades. Which means that AMD was probably silly to spin off its fabs.