Intel hopes ARM deal will give it a leg-up

Intel CEO Pat Gelsinger

Intel, trying to win customers as a provider of outsourced chip manufacturing, is working with ARM to potentially use that company’s technology in its factories.

The agreement, announced on Wednesday, will allow designers of mobile phone chips to use Intel as a manufacturer for a production technique called 18A. The two companies will focus on so-called mobile system-on-chip designs first, but later may expand into automotive components, data centres, aerospace and other areas, according to a joint statement.

The tie-up is the latest step in Intel CEO Pat Gelsinger’s plan to restore the company’s chip industry dominance. By opening his factories to rivals, he’s trying to claw back ground lost to TSMC and Samsung Electronics — companies that surged ahead in manufacturing prowess.

Cambridge, UK-based ARM, meanwhile, is shoring up ties in the industry ahead of a planned initial public offering later this year. The company’s designs and intellectual property are already vital to smartphones and are making inroads in the server and PC markets.

Read: Intel’s troubles run so deep even the bulls are wary

Gelsinger has promised to return Intel to the cutting edge of production technology. The company’s push into outsourced chip making — a field known as foundry services — is also meant to offset a over-concentration of manufacturing in East Asia, particularly Taiwan.

Read: Intel’s plight signals a changing of the guard in chips

Intel, based in Santa Clara, California, has embarked on an ambitious build-out of new plants as part of the effort and announced agreements with companies such as Qualcomm. But so far its outsourcing revenue is less than US$1-billion — a tiny fraction of its $63-billion in annual revenue — and the unit is losing money. — (c) 2023 Bloomberg LP