Here’s Why Intel’s Latest Manufacturing Agreement Is a Big Deal

August 17, 2016, 10:47 AM UTC
Tinker Toys offers young kids the possibility to design their own toys on the internet, have them printed out and sent to them. / AFP / John MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)
Photograph by JOHN MACDOUGALL — AFP/Getty Images

In a move that would have been jaw-dropping a few years ago, Intel’s (INTC) factories are soon going to be churning out chips that use ARM’s (ARMH) designs.

ARM’s architecture almost completely owns the mobile processor space. Intel largely owns the desktop, but failed to make a serious dent in mobile with its Atom system-on-a-chip (SoC) products, which used Intel’s own x86 architecture.

So now Intel has struck a deal with ARM, through which the customers of Intel’s Custom Foundry chip-production lines will be able to make processors using ARM’s off-the-shelf designs.

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Intel said optimizing ARM’s technologies for its upcoming 10-nanometer manufacturing facilities would let customers make power-efficient, high-performance chips for mobile, the Internet of things and “other consumer applications.”

Intel already has LG lined up to build “a world-class mobile platform” using Custom Foundry’s 10nm processes.

Broadly speaking, the smaller the scale on which you build components, the more power-efficient you can make them (assuming you can make them to function reliably). This matters a great deal for embedded electronics, which are essential for mobile and the Internet of things.

Manufacturing facilities using 10nm processes will be state-of-the-art, so long as Intel can get them up and running fast enough. Taiwan Semiconductor Manufacturing Company (TSMC) (TSMC), a key rival, is looking to start trial production using even-dinkier 7nm processes next year.

ARM, which just got bought by SoftBank, said in a blog post that people shouldn’t be surprised to see it collaborating with Intel.

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“Despite press stories, Intel and ARM have worked together for years to help enable the ecosystem, and this is just the latest milestone in that long-standing relationship,” wrote Will Abbey, the general manager of ARM’s physical design group.

“I see it as a natural evolution of the design ecosystem: ARM is a leader in processor and physical design, and Intel Custom Foundry is a leading integrated device manufacturer. This combination is a win-win for customers.”

It’s certainly a way for Intel to stake out territory in the mobile processor business, despite the failure of its previous attempts to tempt people away from ARM. Intel is now rather moving to tempt customers away from key manufacturing rivals such as Samsung.

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