Intel Corp. announced that it has signed a manufacturing agreement with the System LSI Business Division of Panasonic Corp., which creates chips and video encoding/decoding for products such as TVs, Blu-Ray players and set-top boxes.
Under the agreement, the company's custom foundry will be manufacturing future SOCs (system-on-a-chip) for Panasonic using Intel's 14-nanometer low-power manufacturing process. The design for the chips will be created and sent by Panasonic to Intel's manufacturing plants.
The deal marks Intel's entry into multimedia chip manufacturing. Intel has only recently expanded its custom chip manufacturing business in the past two years after making only its own chips for decades.
With the decline of the PC market and Intel's low presence in the burgeoning smartphone and tablet industry, the company decided to keep their chip manufacturing plants working by opening up its plants to other companies.
The chips will be used for Panasonic's future TVs, stereos and other audio-video appliances, which will give the devices higher performance and power efficiency. The chips will include the 3D transistors that have boosted the performance and power efficiency of PCs over the past few years.
As per Intel spokesman Chuck Mulloy, having a high-profile client in Panasonic will increase the visibility of the company's relatively young chip manufacturing business.
However, Intel faces a challenge because of the smaller size of electronic chips for consumer devices such as those of Panasonic's. Intel is currently manufacturing field programmable gate arrays for companies such as Achronix, Altera and Tabula, and these FPGAs are typically bigger than those needed by Panasonic.
Intel has been continuously improving its factories, despite its 14-nanometer plants already viewed as one of the most advanced in the world. The company invests billions of dollars in factory upgrades every two years.
In addition, Intel's advanced factories does not mean that the company is fully into the chip manufacturing business completely as of now, as it competes with dedicated chip manufacturers such as Taiwan Semiconductor Manufacturing Co. and GlobalFoundries.
TSMC and GlobalFoundries operate daily with the mindset of manufacturing chips for other companies. Intel is only just beginning to get used to the idea that it is making adjustments to its manufacturing processes to conform to the needs of its clients.
Intel is currently working with an unknown company to integrate FPGAs into its Xeon processors to double the performance capacity of the FPGAs. Costs and release data of the product have not yet been released, but it has been said that the company is testing the FPGA-integrated Xeon processors with cloud computing service providers.
