Intel established its foundry business unit in March 2021
Intel’s nascent foundry business — Intel Foundry Services (IFS) — has taken a huge leap forward with a deal to produce chips for fabless semiconductor supplier MediaTek for a range of smart edge devices. The announcement comes as the U.S. government is preparing to offer significant subsidies to increase U.S.-based chip fabrication, a decision that many expect will disproportionately benefit Intel.
Currently, MediaTek uses Taiwanese company TSMC for most of its foundry services, but, in response to global shortages and other supply chain challenges, is looking to diversify by adding production capacity in both the U.S. and Europe.
“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. “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.”
The chips for MediaTek will be produced on the ‘Intel 16’ node, an updated version of its legacy process optimized for low-power devices called the 22FFL node.
IFS was established in 2021, and since then, there has been some uncertainty around Intel’s true potential in this field. However, according to analyst firm J.Gold Associates, LLC, the deal with MediaTek might just put the company on the foundry map.
“Signing a major player like MediaTek gives Intel a degree of credibility it wouldn’t have with lesser players. But it also means that given the volume potential for a MediaTek relationship, Intel believes in its ability to act as a foundry service and to have enough capacity in place for high volume manufacturing for others. This has been a question for many as they have tried to assess the real capacity available at Intel for its foundry business and whether Intel was really serious,” stated J.Gold Associates.
The firm also predicts that while the agreement is currently limited to the more mature 16nm process node, it is likely that this will change in the long term. “It’s more likely that 16nm was simply the place that Intel had the available capacity, and that MediaTek felt comfortable placing an order,” the firm guessed. “But as Intel stabilizes its more leading edge fabs like 10nm and below that may not be at full capacity with its own products, there is every likelihood Intel will eventually offer foundry services at those nodes as well.”
Since announcing IFS in March 2021, Intel has committed to investing $20 billion to build two new semiconductor fabrication facilities in Arizona, which it says will bring more than 15,000 long-term jobs to the Arizona economy. And in February of this year, Intel announced plans to acquire Israeli specialist chipmaker Tower Semiconductor for roughly $5.4 billion, a move that “significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand,” according to the company.
In a press release, Mediatek’s Corporate Senior Vice President of Platform Technology & Manufacturing Operations NS Tsai highlighted the chip makers “long adopted a multi-sourcing strategy.”
“We have an existing 5G data card business partnership with Intel, and now extend our relationship to manufacturing smart edge devices through Intel Foundry Services,” said Tsai. “With its commitment to major capacity expansions, IFS provides value to MediaTek as we seek to create a more diversified supply chain. We look forward to building a long-term partnership to serve the fast-growing demand for our products from customers across the globe.”