Intel Outsources Atom Production to TSMC

The Atom processor, the only bright spot on Intel’s balance sheet, will soon no longer be manufactured by Intel itself (CNet has more). Intel has signed an agreement with the Taiwan Semiconductor Manufacturing Company (TSMC), outsourcing the production of the successful chip to Taiwan. While it’s not the first time Intel outsources production of its silicon, it is still an unusual move for the company to outsource the production of such a major chip.

Under the agreement, Intel will ports its Atom processor to TSMC’s “technology platform, including processes, intellectual properties, libraries and design flows”. The aim of the agreement is to expand the availability of the Atom chip to mobile internet devices, smartphones, netbooks, and nettops. “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 customise the implementation precisely to their needs,” Paul Otellini, Intel’s CEO, said.

According to Intel, the deal is not about capacity, but about “expanding mutual market influence into new growth opportunities”. TSMC will not actually market the processors as a TSMC product, but will merely manufacture them. Intel will remain in control over the processes and who to sell to.

“Intel gets a vast new market potential for Atom since TSMC has connections to many consumer and lower end PC-type products (e.g., MIDs, webtop devices, netbooks, media servers/set-top boxes, etc.), especially in the important Far East markets (Taiwan, Japan),” industry analyst Jack Gold told ZDNet. “TSMC gets to offer a high performance processor they did not have to design, but that they can customise for the clients who will take volume products. It also adds the ability to merge the work TSMC is doing on WiMax enabled devices and couple it with Atom processors.”

It’s pretty clear by now that Intel is basically going after ARM. ARM owns a lot of the mobile computing market, and is currently trying to expand into the netbook market. For Intel, it’s vice versa; it owns the netbook market, and wants to expand downwards into the more mobile segments of the market.


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