Intel, TSMC Look to Expand the Atom Processor Line

Intel is planning to use Taiwan Semiconductor Manufacturing to expand the reach of its Atom processors for mobile Internet devices and the small notebooks known as netbooks. Intel and TSMC announce a partnership that allows Intel to port its Atom CPUs onto TSMC's technology platform. The deal also allows TSMC to have access to some Intel intellectual property and designs.

Intel is looking to expand the reach of its Atom processors for netbooks and other types of mobile Internet devices thanks to a new partnership with Taiwan Semiconductor Manufacturing, one of the world's largest semiconductor manufacturers.

Intel and TSMC announced the agreement, officially called a memorandum of understanding, on March 2.

Under the agreement, Intel plans to port its Atom CPU over to TSMC's technology platforms. In turn, TSMC now has access to some of Intel's intellectual property along with other designs. The goal is to expand the reach of Intel's Atom processor to a range of different devices.

Click here to read more about the success of Intel's Atom CPU for netbooks and MIDs.

In addition, Intel and TSMC will work on SOC (system on a chip) designs for Atom. Intel has already said it plans to offer an Atom-based SOC design in the next year called "Lincroft" that includes an Intel Atom processor at the heart of the design. In February, Intel announced that Lincroft would form the foundation of a new type of smartphone from LG Electronics that is now scheduled to hit the market in 2010.

"Today marks a milestone of collaboration," TSMC CEO Rick Tsai said during a presentation.

Intel Executive Vice President Sean Maloney, along with Tsai, made the announcement the morning of March 2. The collaboration, they said, will enable an expansion of "mutual market interests," though Intel and TSMC did not say which specific markets they plan to target with the new partnership.

"Clearly we have markets in mind, but can't talk customers today," Maloney emphasized.

The technologies resulting from the agreement are expected to find adoption in products extending far beyond smartphones, and including netbooks, handhelds and consumer electronics, Tsai said.

However, Maloney was quick to point out that Intel is not giving up on manufacturing processors. Recently, Intel announced that it planned to close some of its older facilities to help reduce costs. That move helped fuel speculations about the March 2 announcement.

"We're not passing over manufacturing," Maloney said. "TSMC and Intel are both happy where they are."

Intel will continue to produce Atom chips in its own facilities and other existing products will also be unchanged, he said. New products, however, will be sold by Intel and created in TSMC facilities.

"We will have full control of who we sell to, but we believe this opens up new series of design opportunities for our customers," Maloney said, praising TSMC's professionalism and savvy within its ecosystem, which he said contributed to Intel's desire to deepen what was already a longstanding relationship.

"It's a bold move," Maloney said. "But it's the tradition of the company to make bold moves in difficult times."

Ross Seymore, an analyst with Deutsche Bank, wrote in a March 2 research note that the agreement between Intel and TSMC means that Intel was looking to expand Atom into the smartphone and handset markets and needed an outside partner with experience in that field.

"We believe this announcement was driven by customers who would like to use Atom, but are hesitant to port their existing designs and IP blocks to Intel process technology. Intel's process technology does not have the reputation for being the most cost-effective, nor does it offer the flexibility of TSMC," Seymore wrote.

"These customers are more comfortable with an ARM model, and this is a step by Intel to accommodate those customers," he added.