Intel's flagship processor, Lunar Lake, will be manufactured using TSMC's 3nm process, according to a reports from Taiwanese media. TSMC is expected to receive nearly $4 billion in orders from Intel in 2024 and more than $10 billion in 2025.

By the end of next year, TSMC is expected to have a monthly capacity of 15,000 3nm chips prepared for Intel, followed by a subsequent increase to 30,000 3nm chips per month. As a result of this substantial capacity expansion, Intel is poised to secure a spot among TSMC's top three clients by 2025, solidifying its position as the second-largest customer in terms of 3nm fabrication. 

This strategic partnership between TSMC and Intel has significant implications for TSMC's revenue growth. Securing orders from Intel is projected to contribute at least 5% annual revenue growth for TSMC, with the proportion expected to reach 8% next year and a remarkable 12% in the subsequent year.

Despite Intel's public statement that only GPU and high-speed I/O chips will be outsourced, the reality is that compute tiles will also be included starting from Lunar Lake. Once TSMC becomes Intel's foundry of choice, it will be difficult for Intel to reverse course. The decision to outsource is expected to significantly boost Intel's production capacity, assuming their internal capacity remains unchanged, with an annual increase of 19-20%. The revenue contribution from outsourced products is projected to reach 28% in 2024 and a staggering 44% in 2025. If these figures prove to be accurate, it would represent an astonishingly high percentage.

In conclusion, it appears that Intel greatly needs TSMC's assistance due to several advantages, including advanced capacity, reduced manufacturing costs, lower process development expenses, saved capital expenditure, decreased depreciation costs, and the ability to offer more competitive product prices.

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