Intel hints at option of custom chip foundry for big customers

Reuters is reporting that Intel "wouldn't blink" if given the chance to make custom chips for Apple's devices, like the iPhone and iPad. At an investor event in London on Thursday, Chief Financial Officer Stacy Smith told journalists that "there are certain customers that would be interesting to us and certain customers that wouldn't." Apple, unsurprisingly, is one of the first type of customer.

Currently the A4 and A5 chips found in iPhones and iPads are manufactured by Samsung, but reports have hinted that Apple may be moving away from Samsung and jumping to Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) on a foundry basis. Given that Apple's A5 chip makes up a large portion of the $7.8 billion components contract Apple has with Samsung, it's no wonder that Intel would want to be a foundry chip maker for the Cupertino company.

As Smith told reporters, "If Apple or Sony came to us and said 'I want to do a product that involves your IA (Intel architecture) core and put some of my IP around it', I wouldn't blink. That would be fantastic business for us." She did also say that Intel would have to put more thought into considering being a foundry for custom chips that didn't involve an Intel architecture core: "Then you get into the middle ground of 'I don't want it to be a IA core, I want it to be my own custom-designed core,' and then you are only getting the manufacturing margin, (and) that would be a much more in-depth discussion and analysis."

[via MacRumors]

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Source: http://www.reuters.com/article/2011/05/26/us-intel-idUSTRE74…

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Reuters is reporting that Intel "wouldn't blink" if given the chance to make custom chips for Apple's devices, like the iPhone and...

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Ben Dotson

the headline should have read: Intel hints at custom chip foundry for big customers, grasps at straws, stock plummets.

May 27 2011 at 8:07 AM Report abuse Permalink rate up rate down Reply

dambo101

Stacy is a he, not a she.

May 27 2011 at 3:20 AM Report abuse Permalink rate up rate down Reply

JustAnnuthaDewd

*sigh* Stacy Stacy Stacyâ€¦ if Apple wanted someone else to make the chips for them at "just" the manufacturing margin, then isn't that better than getting nothing at all? Don't be so naiveâ€¦ Apple is not going to switch to architectures on the iOS devices. Intel does NOT have the clout over Apple that you'd like to believe. If anything, Apple is leading the charge away from your architecture.

May 27 2011 at 12:12 AM Report abuse Permalink rate up rate down Reply

barry

Companies like Samsung that steal ideas.

May 26 2011 at 11:04 PM Report abuse Permalink rate up rate down Reply

JKT

"there are certain customers that would be interesting to us and certain customers that wouldn't."

Slightly off topic, but what type of customer would they NOT want?

May 26 2011 at 10:51 PM Report abuse Permalink rate up rate down Reply

bradltv

"...that would be a much more in-depth discussion and analysis."

Being able to say Intel Inside the iPhone/iPad... That's priceless.

Discussion over.

May 26 2011 at 9:34 PM Report abuse Permalink rate up rate down Reply

1 reply to bradltv's comment

mabhatter

the fact is that Intel is constantly building new factories in order to make ever smaller chips. Things like A4 & A5 don't really need the same process the latest core i7 needs. Intel is now TWO steps of everybody else in manufacturing tech. Even selling time on their old assembly lines is still one step ahead for companies like Apple. It makes sense to pick up something "cheap and easy" like Apple's chips to fill up perfectly functional but "obsolete" chip factories. This is also what IBM has been doing for Nintendo and Microsoft consoles. It's "bread and butter" business. It helps pay the mortgage while their real engineers focus on building a new process faster.

The goal for Apple is to make an A5 chip for a whole year and put it in everything they make... then make A6 for a whole year. If the fab can make it smaller and cheaper before the deadline that's great, but they don't HAVE to to meet Apple's needs. Given a long run, that leaves room for the Fab to optimize their processes... if they can shrink the chip "for free" to the customer, they score by getting more chips on a silicon wafer and get a bit more margin. Not to mention they get to optimize their energy and labor costs when they have a contract they know will pay the bills for a whole year. No need for expensive overtime, etc. They don't want business like other phones or video cards where there's a 3-6 month cycle of new products "just because" it's industry standard. There's nothing to gain because the setup costs are a huge up-front tax on the contract's profits.

May 27 2011 at 2:25 AM Report abuse Permalink rate up rate down Reply