Taiwan Semiconductor Manufacturing Company (TSMC) is positioned to surpass Intel in quarterly revenue for the first time in company history.

Wall Street analysts estimate that Taiwanese foundry giant TSMC will surpass Intel in quarterly revenue for the first time, with TSMC projected to grow second-quarter revenue 43 percent quarter-over-quarter to $18.1 billion while Intel's sales are expected to decline 2 percent sequentially to $17.98 billion. This milestone reflects a fundamental shift in the semiconductor industry's structure, driven by the outsourcing practices of major chip designers like Qualcomm, Nvidia, AMD, and Apple, who design their own chips and contract their manufacturing to foundries like TSMC rather than relying on vertically integrated manufacturers.

Intel's position has become particularly precarious as a result of this industry realignment. The semiconductor giant has traditionally followed an integrated device manufacturing (IDM) model, producing the chips it designs internally, but the company is now increasingly reliant on TSMC and other foundries for certain components while simultaneously expanding its own manufacturing capacity in the West. To navigate this challenge, Intel has adopted a new strategy called IDM 2.0, which aims to produce more of its own chips while also supporting its revitalized foundry business—effectively attempting to compete with TSMC and South Korea's Samsung for contract manufacturing work while depending on those same competitors for components.

This dual approach creates inherent tensions visible in Intel's current product roadmap. Intel's upcoming Ponte Vecchio datacenter GPU will use five different process nodes from both Intel and TSMC, while the next-generation Meteor Lake client processors, set to debut in 2023, will also use a mix of nodes from Intel and TSMC. Meanwhile, Intel's contract manufacturing arm, Intel Foundry Services, remains in its very early stages—generating only $283 million in the first quarter, representing about 1.6 percent of the $16.7 billion in sales TSMC generated in the same period.

Intel's weakening position is further underscored by the fact that Samsung has already surpassed Intel as the largest semiconductor company by revenue, making TSMC's potential ascendancy yet another indicator of how dramatically the competitive landscape has shifted away from the x86 giant in the semiconductor industry.