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Intel Signs MediaTek as Third Major Foundry Customer

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Intel has made MediaTek the third major customer of its new foundry service after Qualcomm and Amazon signed up nearly a year ago.

Intel Foundry Services (IFS) kicked off last year as part of CEO Pat Gelsinger’s IDM 2.0 strategy to create distinct Intel–branded and foundry businesses, the latter of which competes with top rivals Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Foundry. MediaTek, the world’s top–ranked smartphone chipmaker, is one of TSMC’s largest customers.

The agreement helps MediaTek secure a more resilient supply chain through the addition of foundry partner IFS, providing significant capacity in the U.S. and Europe, according to Intel’s press statement.

Randhir Thakur (Source: Intel)

“As one of the world’s leading fabless chip designers powering more than 2 billion devices a year, MediaTek is a terrific partner,” said IFS president Randhir Thakur in a press statement. “We have the right combination of advanced process technology and geographically diverse capacity to help MediaTek deliver the next billion connected devices across a range of applications.”

MediaTek plans to use Intel process technologies to manufacture chips for a range of smart edge devices. IFS offers manufacturing technologies for high–performance and low–power silicon that includes a roadmap for 3D FinFET transistors.

“MediaTek has long adopted a multi–sourcing strategy,” said NS Tsai, a corporate senior vice president at MediaTek. “We have an existing 5G data card business partnership with Intel, and now extend our relationship to manufacturing smart edge devices through IFS.”

With its commitment to major capacity expansions, IFS will help MediaTek meet growing demand from customers worldwide, Tsai added. MediaTek’s largest smartphone customers are currently in China.

In addition to smartphone chips, MediaTek provides smart edge silicon to customers such as Amazon. MediaTek chips power Amazon products such as Alexa, the voice–actuated, cloud–based personal assistant that can control other smart devices. Alexa and other Amazon products, such as Echo and Fire TV, also run on MediaTek chips.

The IFS deal may tighten the partnership between Intel, Amazon, and MediaTek.

At this point, Amazon “arguably is more a packaging than foundry customer” for IFS, according to Matt Bryson, an executive vice president with Wedbush Securities.

Qualcomm and MediaTek are ideal customers for IFS because the smartphone chipmakers don’t have a competitive relationship with Intel.

“Qualcomm and Mediatek make a ton of sense as Intel targets because they don’t really compete against Intel in the datacenter or PC space… unlike AMD, Marvell, Nvidia, etc.,” Bryson said.

At this stage, the Intel deal with MediaTek looks preliminary. The companies didn’t disclose details on process technologies or specific products.

The production schedule is also important, according to Bryson. “By that I mean what’s the timing on the deal? Next year, 2024, 2025, etc., and what chips… flagship modems/APUs or something else with lower volumes?”

Even so, the Intel deal with MediaTek will likely blunt a strong increase in prices from top foundry TSMC, according to Mehdi Hosseini, a senior research analyst with Susquehanna International. MediaTek is one of the five–largest customers of TSMC, which has been raising wafer prices amid an ongoing chip shortage.

“TSMC will have challenges to raise wafer prices by more than ~5% per year and looking forward (2023 and beyond),” Hosseini told EE Times. “TSMC is on track to enjoy a 20–25% increase in blended wafer average sales prices in 2022.”

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