Intel puts chip pact with TSMC on hold

A pact announced last year for Taiwan Semiconductor Manufacturing (TSMC) to go to work putting Intel Atom microprocessors into smartphones, mobile Internet devices and other gadgets looks to remain on hold for a while.

The agreement between the two companies was announced as an important way for Intel to access markets it could not reach on its own. The strategy to work with TSMC is similar to that of Intel rival Arm Holdings, in that Arm provides blueprints for its processors to TSMC, which uses them to build complex chips such as those used in smartphones. Those chips perform several functions, including signal processing, computing, image processing, screen control and more.

The announcement caused excitement for TSMC because it would have provided a rare opportunity for an outside company to produce Intel microprocessors. Intel manufactures its own chips, and closely guards its intellectual property. The deal also indicated that Intel was moving on its plans to compete against Arm in power-efficient processors for mobile devices.

The issue was raised at TSMC's investor conference last week, when analysts asked the company's chairman, Morris Chang, when the first Atoms would roll off TSMC production lines. He said the partnership with Intel remained on hold and that there had been no news for the past six months.

Intel indicated that the waiting will continue. "While we have no short term plans to bring an Atom processor manufactured at TSMC to market, the relationship remains in effect and we are still working with TSMC," said Intel spokesman Nick Jacobs.

The delay in the partnership may be due to a lack of success by Intel in convincing customers to use its Atom processing cores over Arm cores, which are more power efficient. The Wall Street Journal reported over the weekend that Intel may buy Infineon Technologies' communications unit, which includes Arm-based mobile chips, to beef up its product portfolio, a sign Atom may not be working out as Intel had hoped.

Intel declined to comment on the Infineon reports.

But Intel has also talked up plans of its own to produce system-on-chip products (SoCs) containing its Atom processing cores. At the Intel Developer Forum in Beijing earlier this year, executives said they had built a library of chip blueprints to help companies design their own Atom-based chips. The libraries hold chip intellectual property needed in an SoC related to memory, graphics, and more. Intel first turned to TSMC because the company has a huge library of intellectual property that it can draw from to build complex chips, and already produces such chips for companies that design them.

Jacobs said Intel is pleased with its progress so far with Atom.