Intel announces deal to manufacture chips for MediaTek

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In early 2021, Intel revealed plans to manufacture chips for other companies. It wasn’t a bluff. Months later, the company entered into a chip production agreement for Qualcomm. This Monday (25), another agreement of this type was announced, this one with the Taiwanese MediaTek.

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Making chips for other companies is one of the strategies that Pat Gelsinger prioritized when he became CEO of Intel in February 2021. The plan includes a $20 billion investment in the construction of new plants in the United States.

This is only in the initial stage. In the coming years, Intel’s investments in the construction of factories could reach the sum of 100 billion US dollars. That makes sense. The time is ripe for expansion. Indeed, in addition to the growing demand, the US government should soon announce incentives for the local semiconductor industry.

Partnership with MediaTek

MediaTek is best known for making chips for mobile phones. Or rather develop. Like Qualcomm, AMD and other companies in the sector, MediaTek designs chips, but the manufacturing of these is carried out by specialized companies, such as TSMC.

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It is precisely TSMC that produces the vast majority of MediaTek chips, including those intended for mobile phones. However, this partnership will not be broken with the arrival of Intel.
At least in the initial phase, Intel Foundry Services (IFS), as the division of Intel that produces semiconductors for third parties is called, will be responsible for manufacturing MediaTek chips for advanced smart devices.

Intel announces deal to manufacture chips for MediaTek

Intel factory in Oregon, United States (image: publicity/Intel)

The Edge device is understood as equipment that controls data flows between networks, as well as those that communicate with different networks. A router that connects a local network to the Internet, for example, can fall into this category.

The agreement is important for both companies

It’s obvious. No company would partner with another if there were no advantages to this. But it is important to understand each side of this story.

Let’s start with Intel. One of the reasons the company is betting on IFS is the hope that this division will help it overcome its perceived decline in relevance in recent years. By producing chips for third parties, Intel is increasing its presence in a highly demanded market.

At this point, we must bear in mind that the IFS was not created solely to produce chips as complex as Intel’s own processors. In many applications, chips of simple design and therefore low cost are sufficient. MediaTek is looking specifically at this segment.

The agreement should also help MediaTek strengthen its presence in two extremely important regions: the United States and Europe (Intel also has factories on the European continent, in addition to plans for new units in Germany).

In addition, the partnership should allow MediaTek to have a more robust supply chain. Theoretically, a larger number of suppliers reduces the risk for the company of experiencing delivery delays or component shortages.

There must also be financial benefits, but the two companies have been careful not to disclose all the details of the partnership. The volume of chips that Intel will produce for MediaTek and the amounts resulting from the agreement are among the information that remains confidential.

It is worth recalling that in addition to MediaTek, Intel Foundry Services has concluded agreements to produce chips for Qualcomm and Amazon Web Services.

Benedict Onyeka

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