Reuters, OAKLAND, Calif., July 25 – One of the biggest chip design companies in the world, Taiwan’s MediaTek Inc (2454. TW), announced on Monday that it will use chips made by American chipmaker Intel Corp (INTC.O).
One of the most important agreements Intel has made public since establishing its so-called foundry division at the beginning of last year is the production agreement.
Taiwan Semiconductor Manufacturing Co (TSMC) (2330. TW) is the market leader in the foundry industry, which produces chips that are designed by other businesses. In most cases, Intel has produced its own chips.
It’s a fairly huge deal for us to have a Taiwanese customer that is willing to support our expansion and give this a shot. Randhir Thakur, head of Intel Foundry Services, told Reuters that this was a significant anchor customer victory.
Dan Hutcheson, a chip economist at TechInsights, said there were concerns in the industry about Intel’s ability to succeed in the foundry business, but the agreement with MediaTek proves it’s on the right track and that its investments—including in hiring the appropriate executives—are paying off.
According to Hutcheson, chip design companies like MediaTek run the danger of losing two years’ worth of work when they enter a foundry.
“If anything happens and the foundry can’t execute it, you’ve lost that design window in that market window,” the foundry said.
The initial products would be produced in the upcoming 18 to 24 months using a more advanced technology process called Intel 16, with the chips utilized for smart devices. Intel did not provide any financial information about the arrangement or specify how many chips it would be making for MediaTek.
According to a statement from MediaTek, the company has always used many suppliers.
This alliance will increase MediaTek’s supply of advanced process nodes while still preserving a close working relationship with TSMC in mature process nodes.
Qualcomm Inc (QCOM.O) and Amazon.com have struck agreements with Intel’s foundry unit, the company previously said (AMZN.O).