Intel Corp., the world’s leading maker of central processing units, and Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract maker of semiconductors on the planet, on Monday unveiled a strategic agreement under which TSMC will make Intel Atom-based system-on-chip (SoC) microprocessors for the chip giant and the companies will also cooperate in other areas.

Under the newly signed memorandum of understanding, Intel would port its Atom processor CPU cores to the TSMC technology platform including processes, IP, libraries, and design flows. The result will allow fabless SoC developers to integrate Atom processing capabilities into SoC designs that are made at TSMC.

“We believe this effort will make it easier for customers with significant design expertise to take advantage of benefits of the Intel Architecture in a manner that allows them to customize the implementation precisely to their needs. The combination of the compelling benefits of our Atom processor combined with the experience and technology of TSMC is another step in our long-term strategic relationship,” said said Paul Otellini, Intel president and chief executive.

This is the first time in many years that Intel outsources part of its production/allows third party to manufacture its products as the company has been heavily investing into new manufacturing capacities as well as development of future process technologies. Nevertheless, in case of some not very expensive chips it may make sense to turn to contract manufacturers in order to reduce costs. Besides cost reduction, allowing TSMC to produce Atom-based SoCs enables Intel's technology to power yet untapped markets. Intel will sell Atom-based SoCs, whereas Taiwan Semiconductor Manufacturing Company will only be a manufacturer.

Many years ago Intel already outsourced production of its core-logic sets to third parties in order to be able to concentrate on manufacturing of leading-edge microprocessors. Intel will continue to produce Atom processors itself and will not shift the roadmap.

“The agreement is not about capacity, it is about strategy [to get into new markets],” said Anand Chandrasekher, senior vice president and general manager of ultra mobility group at Intel.

Intel stressed that actual products details and products implementations are currently discussed.

The head of TSMC, Rick Tsai, said that Intel will get full access to production technologies of the contract semiconductor during their development time in order to be able to further collaborate and tailor its Atom chips to the process requirements. Mr. Tsai stressed that the companies have been planning strategic partnership for three years.

 The event was hosted by Intel executives Anand Chandrasekher, senior vice president and general manager of ultra mobility group and Sean Maloney, who is executive vice president and chief sales and marketing officer. From TSMC, Rick Tsai, chief executive officer of the company, and Jason Chen, who is vice president of sales and marketing for TSMC.

Tags: Intel, TSMC, Semiconductor