Intel expands contract manufacturing

The company will make chips for third parties, CEO Brian Krzanich tells investors

Intel is offering contract manufacturing to any company that wants advanced silicon.

Intel had previously offered contract manufacturing to only select customers such as Altera, Achronix and Netronome, which design high-margin FPGA (field-programmable gate arrays) products, but is expanding that part of its business, Intel CEO Brian Krzanich, said Thursday, during an Intel investor meeting in Santa Clara, California, which was webcast.

"If we can use our silicon to provide the best computing, we'll do it," Krzanich said. "You will see us focusing on a much broader set of customers."

Intel's manufacturing facilities are considered the most advanced in the industry, so the company believes that gives it an advantage as it makes its way into the market for smartphone and tablet chips. Intel competes with ARM in the mobile device, PC, server and embedded markets.

Intel's competitors also include contract manufacturers such as Taiwan Semiconductor Manufacturing Co. and GlobalFoundries, which make ARM-based chips for clients such as Nvidia and Qualcomm. TSMC and GlobalFoundries will start making chips with 3D transistors using the 16-nanometer and 14-nm processes, respectively, starting next year. But Intel hopes to take business away from those companies and will also make 64-bit ARM-based chips on its 14-nm process for Altera, which is one of the top FPGA companies.

Intel is currently struggling with its 14-nm process, delaying by three months the manufacture of chips. Its PC chips code-named Broadwell, which are based on the 14-nm process, are now expected to appear in the second half of next year.

Intel has had idle capacity in its factories with the decline in demand for its PC chips, which has hurt the company's profits.

Krzanich pitched its manufacturing facilities to third parties as keeping up with Moore's Law, which could bring power and performance benefits. There have been many interpretations of Moore's Law in the past, with one being that the number of transistors that can be placed on silicon doubles every two years. Intel interprets Moore's Law to the economics related to cost-per-transistor, which drops with advances in manufacturing.

There will be substantial performance improvements as well as cost and power reduction with the 14-nm and 10-nm processes, said William Holt, executive vice president and general manager of the Technology and Manufacturing Group, during a speech at the investor meeting.

"All of the segments need these improvements in power," Holt said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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