intel outside

intel outside

Intel Corp. CEO Bob Swan spent nearly an hour Thursday discussing an idea that would once have been unthinkable for the world’s largest semiconductor company: Not making their own chips. Intel’s shares fell 18% Friday morning.

Outsourcing is now the norm in this $400 billion industry, but for 50 years Intel has combined chip design with in-house production. And until recently, Intel even considered producing processors for others.

“To the extent that we need to use someone else’s process technology and call these contingency plans, we’ll be ready to do it,” Swan told analysts in a conference call after the company warned of another delay in the production process. ” This gives us a lot more options and flexibility. So if the process gets out of control, we can try something rather than doing everything ourselves.”

Pursuing this option would represent a huge shift in the industry and the end of Intel’s biggest differentiator, said analyst Matt Ramsay of Cowen & Co.