Intel in talks about outsourcing chip manufacturing

1 Mar 2009

The world’s largest chip manufacturer Intel is understood to be in talks with outsourced chip foundry TSMC about a strategic outsourcing plan.

Intel is set to make a strategic announcement on the relationship tomorrow (2 March 2009).

TSMC is the world’s biggest manufacturer of made-to-order chips.

An announcement is expected to be made by Intel head of sales Sean Maloney and general manager of ultra mobility Anand Shandrashekar.

It appears that Intel may be focusing on keeping core manufacturing, particularly high-end 45-nanometer and 65-nanometer, but outsourcing non-core processes to control chip manufacturing costs which have skyrocketed in recent months.

In January, Intel revealed plans to shut plants in Malaysia and the Philippines, and its last remaining factory in Silicon Valley, a move that would cost 6,000 jobs.

At the same time, Intel revealed plans to spend US$7bn to build next-generation 32-nanometer chip plants.

Last week Intel, which employs 5,000 people in Ireland, announced a €50m investment of its operation facility in the Shannon Free Zone that would create 134 jobs in software and chip R&D, particularly around 32-nanometer chips.

The news came a week after it emerged that 300 jobs are at risk at Intel’s Leixlip manufacturing facility, where high-end chip manufacturing takes place.

Up to now, Intel has maintained a policy of manufacturing its own microprocessors, but had previously outsourced certain processes such as chipsets and wireless devices.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years