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5/27/2011
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Intel Considers Fabbing Chips For Others

Fueling rumors that Intel will manufacture custom chips for Apple, CFO Stacy Smith said the company is open to manufacturing processors for competitors.

A top Intel executive confirmed Thursday that Intel would consider making chips for rival consumer electronics vendors.

Intel CFO Stacy Smith told journalists after an investor event in London on Thursday that Intel would consider producing chip cores based on its own architecture for other companies, Reuters reported. However, if rival chip architectures were requested, Intel would have a tough decision to make.

"If Apple or Sony came to us and said, 'I want to do a product that involves your IA [Intel architecture] core and put some of my IP around it,' I wouldn't blink. That would be fantastic business for us," Smith said. "Then you get into the middle ground of 'I don't want it to be a IA core, I want it to be my own custom-designed core,' and then you are only getting the manufacturing margin, [and] that would be a much more in-depth discussion and analysis."

Smith's comments allow for substantial speculation over whether Intel is hoping to target the mobility space, primarily Apple's A4 and A5 system on a chip, which is used in its iPhone, iPad, and iPod products. Intel lately has been targeting the microprocessor space dominated by ARM processors, the only chip market Intel doesn't hold a majority market share in. Smith said a proposal from Apple was "not in the works today."

Earlier this year, Intel introduced its Medfield smartphone processors as a challenge to ARM-based processors, which are used in nearly every major mobile phone. Before the release, Intel said smartphones running on the new chip would be released this year, but so far that has not materialized.

The recent impromptu announcement by Intel's CFO could be a move toward financial due diligence, since in April Intel increased its capital spending plan for 2011 from $9 billion to $10.2 billion.

"It makes economic sense for Intel to have a good factory load, and one of the best ways would be to be a source for other chip manufacturers, whether it be competitive or not," said Vernon Turner, senior VP for IDC, in an interview.

The volume of processors Intel could produce on, say, an ARM architecture would be financially worthwhile in the short term, Turner said. A company like Apple could benefit from Intel's new 22-nanometer fabrication process, which is expected to give Intel's new trigate chips lower active state power consumption, lower off-state power consumption, and higher performance. This could potentially give Apple a performance edge over its competitor's ARM processors in power and performance.

However, if Intel did indeed begin creating custom-built processors, it could disrupt the partnerships Intel has with various vendors already, Turner said.

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