Intel Corp and TSMC today announced an agreement that will see the Santa Clara, Calif-based chipmaker port its Atom processor CPU cores to the TSMC technology platform including processes, IP, libraries, and design flows.

The move extends an existing relationship between the two companies that has seen TSMC on a foundry basis make Intel chipsets and other products including NOR flash. Analysts estimate that Intel accounted for less than 5% of TSMC's total revenue prior to this agreement.

The Atom is one of the semiconductor industry's star players right now. With the family -- targeted at the low-cost netbook and MID (mobile Internet device) categories -- Intel managed to show PC MPU market share growth during Q4 2008, even as total units shipped declined 17% quarter over quarter and 11.4% year over year on the harsh economic conditions, according to IDC. Without Atom, Q4 PC processor shipments would have shown a decline of 21.7% quarter over quarter and 21.6% year over year, IDC has reported.

Intel believes that with the TSMC collaboration it will be able to expand its Atom SoCs availability to a wider range of applications, broadening the market opportunities for Atom and accelerating deployment of the architecture through multiple SoC implementations.

Intel said that products manufactured through the agreement may find adoption in embedded CPU market segments including MIDs, smartphones, netbooks, nettops, and AC-powered consumer electronics device.

“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,” said Paul Otellini, Intel president and CEO, in a statement. “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.”

On its end, TSMC extends its technology platform to serve the Intel Architecture market segments with this agreement.

“TSMC values our strategic relationship with Intel," said Rick Tsai, president and CEO of the industry's top foundry, in the statement. "We expect this collaboration will help proliferate the Atom processor SoC and foster overall semiconductor growth. With this agreement, our technology platform extends beyond the two companies’ current collaboration to support future Intel embedded x86 products.”

Otellini and Tsai were not alone in their positive views. Noting that macro uncertainties continue and that few technical specifics on the agreement have been shared at this point, Tim Luke, a market analyst with Barclays Capital said Intel could outperform it peers with the deal.*

"The agreement principally enables Intel customers to utilize TSMC's processes and licenses (communication IP, audio visual codecs, and others) as a foundry to get faster time to market for key segments including embedded, consumer, [and] smartphones," Luke said in a research report this afternoon. "We view the collaboration as a strategic positive for Intel (potentially enabling expanded Atom revenues) although there were few details on time line, margin implications, and node."

The announcement comes as much industry attention is being put on manufacturing and needed adjustments to better align with lower demand as electronics sales continue to be constricted by the economy. Intel in January announced it would close or end production at five of its plants, including some 200-mm fabs, and to lay off up to 6000 employees as it reset its manufacturing strategy. In February, Intel announced a $7 billion investment in US-based manufacturing for 32-nm process. That effort is expected to support 7000 jobs.

"Intel has shown the gutsy single-mindedness needed to win new chip markets and it has simultaneously not shirked the hard fact that its cost and marketing structure couldn't compete," Malcolm Penn, CEO and chairman of Future Horizons, said in a statement on today's agreement. "These are the sort of no-nonsense 'just do it' decisions that helped make the chip industry  (and in particular Intel and TSMC) great. It has powerfully raised the competitive stakes in the digital consumer electronics market."

By: DocMemory
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