updated 06:20 am EDT, Mon November 1, 2010
Will build Achronix Semiconductor design
Intel will enter the chip contract marketing business, joining the likes of Samsung and several Taiwanese and Chinese fabricators by making third-party designs. The New York Times reports that beginning next year, Intel will leverage its massive multi-billion dollar fabrication operations to manufacture silicon penned by a small semiconductor designer, Achronix.
The chips that Intel will manufacture for Achronix have specialized functions and do not compete in the same space as Intel. They are principally designed for directing and optimizing network traffic and for the encryption of data, but the move has led to analysts speculating about Intel's plans.
While the agreement will amount to no more than 1 percent of Intel's production capacity, it is an interesting strategy that Intel may be able to capitalize on when the market demand cycle dips, leaving it with surplus production capacity that it will now be able to utilize.
From Achronix's perspective, the move will allow them to make better, faster products for reduced costs that will give the company a competitive edge over its opposition in a market space that is worth $3 billion.