Intel, one of the biggest tech companies in the world, announced that it would manufacture semiconductors for Taiwan's MediaTek.
This decision will give Intel a massive boost for its contract chipmaking business.
Intel to Manufacture Chips for Taiwan
Taiwan's MediaTek is one of the biggest suppliers of smartphone processors, and it is Qualcomm's rival.
On Tuesday, July 25, Intel Foundry Services stated that it would manufacture several semiconductors for MediaTek for a range of smart edge devices.
Pat Gelsinger took over as Intel's CEO in 2021 and immediately made revitalizing the foundry business the key priority in order to catch up with and break the dominance of Asian companies like Samsung and TSMC.
Through its foundry business, Intel will manufacture semiconductors that other companies design. The tech giant plans to spend up to $40 billion building fabrication plants in several countries, according to Nikkei Asia.
Also Read: Intel Joins MITRE Engenuity's Semiconductor Alliance
The agreement between the two companies is designed to help MediaTek build a more balanced and resilient supply chain by adding a new foundry partner with significant capacity in the United States and Europe.
MediaTek corporate senior vice president NS Tsai said the partnership with Intel gives value to the company as it seeks to create a more diversified supply chain.
The main manufacturing partner for chips of MediaTek is TSMC. It is not clear what MediaTek semiconductors Intel will be used for.
Global Chip Shortage
Several chip companies around the world have been focusing on strengthening their supply chains and diversifying their production despite the ongoing global chip shortage. The said shortage has been an issue since 2020.
However, the manufacturing of the most advanced chips is not something that a lot of companies can do and is in the act is dominated by TSMC and Samsung. The two companies account for more than 70% of global foundry revenue, according to CNBC.
The demand for chips continues to rise, which is why Intel and its rivals are now planning to ramp up their spending on foundries.
But compared to its Asian rivals, Intel lags far behind, though partnering up with MediaTek as a customer will give it the boost it needs.
MediaTek had 38% of the smartphone application processor market in the first quarter of 2022, making it the biggest company in the segment.
What Caused the Chip Shortage
According to TechRepublic, the chip shortage began after consumers stocked up on computers, tablets, laptops, and other electronics during the COVID-19 pandemic in 2020, and it has also affected car production around the world.
GM stated in February 2021 that it would extend its production cuts in the United States, Canada, and Mexico. The extension lasted until the middle of March 2021.
The company joined a long list of major automakers, including Fiat Chrysler, Ford, and Honda, which have warned investors or slowed vehicle production because of the semiconductor shortage.
However, it is not just the automotive industry that is struggling to get enough semiconductors to create their products. Qualcomm and AMD, which sell semiconductors to most of the top electronics firms, have noted the shortage in 2021.
Meanwhile, Sony blamed the semiconductor shortage for a reason behind the limited stock of PlayStation 5.
Related Article: Intel for Cars: Company Aims to Help Fight Global Semiconductor Shortage by Amping Manufacturing in the US and EU
This article is owned by Tech Times
Written by Sophie Webster
