Intel to make chips for MediaTek in bid to revive foundry unit

Intel Foundry Services will manufacture several chips for MediaTek for a range of smart edge devices, the two companies announced Monday.

Fabien Bimmer | Reuters

Intel will manufacture semiconductors for Taiwan’s MediaTek, giving the US company a big boost for its contract chip manufacturing business.

MediaTek is one of the biggest smartphone processor vendors and a rival to Qualcomm. Intel Foundry Services will manufacture several chips for MediaTek for a range of smart edge devices, the two companies announced Monday.

After taking charge of Intel last year, Pat Gelsinger has made revitalizing the foundry business a key priority in order to catch up and break the dominance of Asian rivals TSMC and Samsung. Through its foundry business, Intel will manufacture chips that other companies design. The American giant plans to spend more than $40 billion to build manufacturing plants around the world.

“The agreement is designed to help MediaTek build a more balanced and resilient supply chain through the addition of a new foundry partner with significant capacity in the United States and Europe,” Intel said. in a press release.

NS Tsai, senior vice president at MediaTek, said the partnership with Intel “brings value” to the company as it seeks to “create a more diverse supply chain”.

TSMC is MediaTek’s primary chip manufacturing partner. It is unclear which semiconductors MediaTek Intel will be responsible for manufacturing.

MediaTek was not immediately available for comment when contacted by CNBC.

Chip companies around the world have focused on strengthening their supply chains and diversifying production amid a global chip shortage that has persisted since the start of 2021.

But making the most advanced chips isn’t something many companies can do and is actually dominated by TSMC and Samsung. These two companies account for more than 70% of global foundry revenue, according to TrendForce.

As demand continues to rise for chips, Intel and its Asian rivals plan to increase spending at foundries.

But Intel is far behind, although winning MediaTek as a customer will give the company a boost. MediaTek held 38% of the smartphone application processor market in the first quarter, making it the largest company in the segment, according to Counterpoint Research.