SK Hynix Reportedly Considers Intel for HBM4E Base Dies, Posing Strategic Challenge to TSMC

SK Hynix Inc. is considering using Intel Corp.'s foundry services to produce base dies for its next-generation HBM4E memory, according to a report from Korea's *Herald Economy*. The move, which the report stresses is not yet finalized, signals a potential strategic diversification for SK Hynix and introduces a new competitive dynamic for Taiwan Semiconductor Manufacturing Co. (TSMC), currently the sole supplier for this critical component.

A Bid for Diversification and Cost Control

For SK Hynix, the primary motivations appear to be cost reduction and supply chain resilience. Industry estimates suggest the 12nm-class process used by TSMC for base dies costs three to four times more than the core DRAM die itself. As SK Hynix ramps up production of advanced memory for major clients like NVIDIA, which has committed billions in memory purchases, securing a more cost-effective manufacturing alternative from Intel Foundry is a logical consideration.

Dual-sourcing key components is a standard practice to mitigate supply chain risks. The report notes that SK Hynix previously faced HBM4 shipment delays, underscoring the importance of having multiple manufacturing partners to ensure a stable supply for the booming AI accelerator market.

Strategic Implications for TSMC

While losing the SK Hynix HBM4E base die orders would have a negligible direct impact on TSMC's vast revenues, the strategic implications are more significant. The development represents a potential long-term challenge to TSMC's market position in several ways:

Ad

• Competitive Opening: If Intel successfully demonstrates it can deliver base dies at the required cost and yield for SK Hynix, other major memory producers like Samsung and Micron would likely evaluate a similar path.
• Gateway to Advanced Packaging: Base die manufacturing could serve as an entry point for Intel Foundry. A successful partnership could lead memory companies to consider Intel for more lucrative, higher-margin services like hybrid bonding and advanced packaging, a core area of TSMC's business.
• Erosion of Pricing Power: The existence of a viable alternative in Intel Foundry, even if not fully utilized, provides memory makers with crucial leverage to negotiate better pricing with TSMC on future contracts.

TSMC's Dominance Remains Secure for Now

Despite the potential challenge, TSMC's leadership in the semiconductor industry is not under immediate threat. The report from *Herald Economy* explicitly states this is a plan under consideration, and Intel Foundry must still prove it can achieve reliable, high-volume manufacturing at the required nodes.

Furthermore, TSMC's primary advantage remains its undisputed dominance in cutting-edge logic nodes, such as 3nm technology. These advanced logic chips are the core of AI accelerators from companies like NVIDIA, Apple, and AMD, and for these products, TSMC remains the indispensable manufacturing partner. While TSMC shares fell on the day of the report, the decline was part of a broader market selloff and not seen as a specific reaction to this news.