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Intel Signs Up Taiwan-Based MediaTek In Win For Foundry Plans

Thomas Grillo

Intel’s deal with TSMC partner MediaTek, a Taiwan-based chip designer, is a big win for Intel’s foundry plans.

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Intel Corp’s growing foundry business got a big boost Monday in the form of a blockbuster deal with Taiwanese chip designer MediaTek.

Under the new pact, MediaTek, which has previously partnered with Taiwanese semiconductor contract manufacturer TSMC, will rely on Intel Foundry Service (IFS) to build new chips for a range of smart edge devices.

The agreement is aimed at providing MediaTek with a “more balanced, resilient supply chain” by bringing on board IFS capacity in the United States and Europe. Terms were not disclosed.

[RELATED: Intel Now Prepping Ohio Semiconductor Fab]

The agreement is one of the most significant deals Intel has captured since launching its foundry business last year.

The deal comes just three months after Intel CEO Pat Gelsinger told Wall Street analysts that the company’s foundry services business had hit for the first time a $1 billion run rate.

“We continue to make progress toward being the trusted provider of foundry services,” said Gelsinger in a first quarter earnings call in April. “Our overall customer pipeline remains robust , and we now have more than 10 qualified opportunities in advanced stages of engagement across our process and package offerings that collectively represent a deal value of greater than $5 billion.”

CRN reached out to Intel and MediaTek but had not heard back at press time.

This strategic partnership is more evidence that Intel’s foundry business is broadening its reach by leveraging its chip manufacturing muscle.

“As one of the world’s leading fabless chip designers powering more than 2 billion devices a year, MediaTek is a terrific partner for IFS as we enter our next phase of growth,” said IFS President Randhir Thakur in statement.

“We have the right combination of advanced process technology and geographically diverse capacity to help MediaTek deliver the next billion connected devices across a range of applications.”

But not everyone is convinced it’s a great idea.

Bob Venero, president and CEO of Future Tech Enterprise Inc., the Fort Lauderdale, Fla.-based IT solutions provider that supports companies in the aerospace, defense, education, energy, government, healthcare, manufacturing, and retail sectors, is not so sure Intel’s agreement to build chips for other companies is the best thing for the industry.

“It’s a positive,” he told CRN. “But I am also concerned about the fact that we are running into chip challenges in fulfilling the basic needs from a customer perspective.”

As Intel takes more on and builds chips for other organizations, it could exacerbate the supply chain problem, he said.

“Look, Intel is in a very good position to do some very strong things,” Venero said. “But I don’t want them taking their eye off the ball, which is basic blocking, tackling and fulfilling the needs that we have in a global supply chain shortage.”

The news comes as Intel CEO Pat Gelsinger warned last week that he may expand chip production in Europe instead of the U.S. if Congress fails to approve the CHIPS Act, $52 billion in government funding.

“The rest of the world is moving rapidly despite the inability of Congress to get this finished,” Gelsinger told a panel at the Aspen Ideas Festival.

In response, Sen. Bernie Sanders (D-Vermont) blasted Gelsinger on Twitter.

“Listen to the CEO of Intel tell you all you need to know about oligarchy, corporate arrogance, and the state of American politics. It sure sounds like extortion to me,” he said.

Earlier this year, Intel announced it would acquire Israel-based Tower Semiconductor for $5.4 billion to move forward with its plans to manufacture chips for other companies. The tech giant also said it would invest an intial $20 billion to start a “mega-site” for chipmaking factories in Ohio.

 

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Thomas Grillo

Thomas Grillo covers chips and the Internet of Things for CRN. He has covered the residential and commercial real estate sectors for The Boston Globe, Boston Herald, Boston Business Journal, Banker & Tradesman, and Lynn’s Daily Item. He can be reached at tgrillo@thechannelcompany.com.

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