While Intel Custom Foundry, the contract semiconductor manufacturing division of Intel Corp., officially has a limited amount of customers, the company has admitted that there are a number of unannounced contracts. According to a representative of the company in South Korea, the world’s largest maker of microprocessors will manufacture custom chips for Cisco, which can easily be the largest order for ICF ever.
“Intel has recently signed an agreement to manufacture Cisco’s networking chips on a contractual basis,” said Lee Hee-sung, country manager at Intel Korea, during an interview with The Korea Times.
The company did not reveal which chips it will actually produce for Cisco and which process technology will be used to make them. Previously, Intel signed contracts to produce field-programmable gate arrays (FPGA) as well as flow processors using 22nm and 14nm process technologies for various companies. Therefore, Intel can produce virtually everything on contract basis.
The deal with Cisco seems to be a significant win for Intel, which needs to ensure maximum utilization of its leading-edge manufacturing facilities and maximize its earnings. Requirements of Cisco are very high, hence Intel will have to produce loads of network chips for the partner.
Earlier this year rumours transpired that Intel was in talks to make custom chips for Apple on a contract basis. However, given that Apple needs extreme volumes of processors it designs, it is unlikely that Intel will have enough capacities to serve both Apple and itself until 450mm fabs are built and go online.
Intel established its Intel Custom Foundry division within its technology and manufacturing group about three years ago, but it remains extremely tight-lipped about its ongoing endeavors, future plans, prospects and clients. Being the largest maker of semiconductors in the world, Intel has leading-edge process technologies and invests more than anyone else in research and development (R&D) of new manufacturing processes as well as building new manufacturing facilities. Since it every new technology node costs more than the previous one and the cost of new fabs is growing as well (and with 450mm factories their cost will get even higher), Intel needs to constantly sell more chips and ensure full utilization of its factories. One of the ways to guarantee maximum utilization of production facilities is to make chips for others.