Intel to make chips for MediaTek to revive foundry

Both companies said on Monday that Intel Foundry Services will produce multiple chips for MediaTek for a range of smart peripherals.

Fabian Bimmer | Reuters

Intel will produce semiconductors for Taiwan MediaTechwhich gave the American company a big boost for its contract chip manufacturing business.

MediaTek is one of the largest suppliers of smartphone processors and a competitor Qualcomm. Both companies said on Monday that Intel Foundry Services will produce multiple chips for MediaTek for a range of smart peripherals.

Since taking over as CEO of Intel last year, Pat Gelsinger has made revival of the foundry business a key priority in order to catch up and break the dominance of their Asian rivals TSMS as well as Samsung. Through its foundry business, Intel will produce chips that other companies are developing. The American giant plans to spend more than $40 billion building factories around the world.

“The agreement is designed to help MediaTek build a more balanced and resilient supply chain by adding a new foundry partner with significant manufacturing capacity in the US and Europe,” Intel said in a press release.

N. S. Tsai, senior corporate vice president at MediaTek, said the partnership with Intel “provides value” for the company as it seeks to “create a more diversified supply chain.”

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

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 in a global chip shortage which has been maintained since the beginning of 2021.

But producing the most advanced chips is not 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 for chips continues to rise, Intel and its Asian rivals are planning increase spending on foundries.

But Intel is far behind, though acquiring MediaTek as a customer would give the company a boost. According to Counterpoint Research, MediaTek had a 38% share of the smartphone application processor market in the first quarter, making it the largest company in the segment.