Intel CEO Bob Swan admitted to the unthinkable this week, saying that his firm could outsource chip production to remain competitive with its smaller, more innovative rivals.

The admission came during Intel’s post-earnings conference call. Intel, which had just delayed the introduction of 10-nanometer (nm) chipsets for five years, had admitted earlier in the day that its next-generation 7-nm designs were also behind schedule and would face at least another year of delays. Meanwhile, Intel’s competitors are already shipping more efficient designs. AMD moved to 7-nm chips this year, and Qualcomm has moved to even smaller 5-nm designs.

“We have invested in contingency plans to hedge against further schedule uncertainty,” Mr. Swan said in response to a question about Intel’s inability to ship 7-nm chips on time and whether the firm would consider outsourcing. “The extent that we need to use somebody else’s process technology and we call those contingency plans, we will be prepared to do that. And if we do, there’s lots of moving parts.”

Even the admission that Intel is prepared to outsource chip production is a massive hit to the reputation of a firm that ostensibly led this market for over 30 years. Like Microsoft in software, Intel was the hardware that drove the PC revolution, and its chips are still popular in PCs and datacenters today. But these markets are moving, inexorably, to more power efficient designs like those from ARM and its licensees. And that could leave Intel out in the cold.

Quoted in Bloomberg, analyst Chris Caso described the admission as “a stunning failure [that] could well represent the end of Intel’s computing dominance.”

“With the latest push out of process technology, we believe that Intel has zero-to-no chance of catching or surpassing TSMC at least for the next half decade, if not ever,” analyst Chris Rolland added, referring to a Taiwanese manufacturing facility. TSMC already produces more than one billion chipsets each year, far more than Intel.

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