Intel’s CEO Patrick Gelsinger’s recent statements regarding TSMC’s (Taiwan Semiconductor Manufacturing Company) activities in China are said to have caused tension between the two firms, as per a report from Reuters. The fallout has led Intel to miss out on discounts that were previously available from TSMC. In its focus on developing chips using its 18A process, Intel was originally in line for a 40 percent discount on TSMC’s 3-nanometer technology. However, due to Gelsinger’s remarks, Taiwan Semiconductor Manufacturing Company withdrew the discount offer.

More About the Intel-TSMC Chip Scenario

Ever since Gelsinger took over at Intel’s helm as the leader of the company, Intel has been focusing on reclaiming its top position, in global chip manufacturing. Additionally, the company has been working on setting up a contract manufacturing unit to compete with TSMC, while also outsourcing some production to Taiwan Semiconductor Manufacturing Company. In 2021, TSMC proposed a 40% discount to Intel, reducing the $23,000 wafer cost to approximately $14,000 for its then-leading 3-nanometer process.

At that time, Intel was also working to secure U.S. government subsidies for its advanced technology efforts, with Gelsinger highlighting Taiwan’s geopolitical risks to emphasize the need for more localized production. During the Fortune Brainstorm Tech Conference, he stated, “Taiwan is not a stable place,” which triggered a pointed response from TSMC’s founder, Dr. Morris Chang, who called Gelsinger’s comments self-serving and aimed at securing U.S. funding.

However, the incident led to TSMC rescinding the discount on 3-nanometer wafers and Intel was ultimately left paying full price as a consequence of this defense measure required by Arm-based companies from Taiwan’s largest chipmaker. As reported by Reuters, Gelsinger’s optimistic comments regarding AI chip sales in public were at odds with Intel’s internal projections. Meanwhile, Intel dropped a self-driving chip deal that included Alphabet over the escalating cost of such an endeavor and to avoid future legal challenges.

Representatives of both Intel and Alphabet declined to comment on the scrapped deal. Additionally, a recent document from an Intel supplier hinted at possible delays in the company’s 18A process, with sources noting that major customers like Qualcomm and Apple are hesitant to adopt it due to technical concerns. Nevertheless, Intel is sticking to its claim that 18A will come out next year in an effort to reclaim process leadership.