Intel is finally cracking the foundry business in its deal with Taiwan's MediaTek

Intel is finally cracking the foundry business in its deal with Taiwan’s MediaTek. (Photo by SAUL LOEB / AFP)

Intel is finally cracking the foundry business in its deal with Taiwan’s MediaTek

  • Intel and MediaTek have formed a strategic partnership to build chips for “a range of smart edge devices” using Intel Foundry Services (IFS).
  • While TSMC has been producing MediaTek’s advanced process nodes for a long time, the partnership with Intel will focus on building for mature nodes.
  • The partnership marked a major strategy shift for Intel, which for years had focused on making chips for its own use.

In 2021, Intel launched Intel Foundry Services, a new division of its internal foundry that will manufacture third-party chips. It was part of the US tech giant’s goal after CEO Pat Gelsinger assumed his current role in 2021 — to crack the foundry business, which also means to start making chips for other companies. After all, Gelsinger’s strategy is to regain Intel’s leadership in semiconductor manufacturing by 2025.

For context, Intel had for years focused on making chips for its own use, therefore the move to venture into the foundry business marked a major strategy shift for the company. Yet, Intel seemed unperturbed with the competition within the space, but more focused on restoring its lead in the process race. So far, Intel has attracted Qualcomm and cloud service provider AWS, its first major customers, to use its production platforms. 

Earlier this week, Intel announced that it will soon start producing chips for Taiwan’s MediaTek after signing a deal with the latter. The strategic partnership to manufacture chips using Intel Foundry Services’ (IFS) advanced process technologies, marks an important win for America’s biggest semiconductor company as it attempts to break into the chip foundry business dominated by Taiwan Semiconductor Manufacturing Co (TSMC).

For context, both Qualcomm and MediaTek are TSMC’s clients. MediaTek, also the world’s leading mobile chip developer by shipments, told Nikkei Asia that the partnership with Intel will be for “mature” chip production process technologies, such as the so-called Intel 16 process technology, which can be used in a wide range of chips for “smart edge devices.” 

On the other hand, MediaTek has been one of TSMC’s top clients for years, whereby all of the former’s 5G mobile chip platforms and chips are made using the latter’s cutting-edge technology.  The agreement with Intel is also designed to help MediaTek build a more balanced, resilient supply chain through the addition of a new foundry partner with significant capacity in the United States and Europe, according to Intel.

MediaTek is currently a key supplier to almost all major smartphone makers, including Samsung Electronics, Oppo, Vivo and Xiaomi, as well as networking equipment maker Cisco. The Taiwanese mobile chip developer said it has long adopted a “multi-sourcing strategy” and that it will continue to maintain a “close partnership with TSMC in advanced process nodes.” In response to the deal, TSMC told Nikkei Asia that MediaTek is a longtime customer with a strong partnership in advanced technology. “

There is no impact on TSMC’s business with MediaTek,” the company said. Last year, Intel detailed its “IDM 2.0” strategy to catch rivals TSMC and Samsung by 2025, kicking it off with a US$20 billion investment in two Arizona fabrication plants. Intel said IFS is differentiated from other foundry offerings with a combination of leading-edge process and packaging technology, a “world-class” IP portfolio, and committed capacity in the US and Europe.