Intel, TSMC to unveil strategic tie-up on Monday

SAN FRANCISCO Sat Feb 28, 2009 6:28pm GMT

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SAN FRANCISCO (Reuters) - Intel and TSMC will make a "strategic announcement" on Monday, driving market and media speculation that the world's largest chip maker might begin to outsource crucial manufacturing.

Intel said in an emailed statement on Friday that sales chief Sean Maloney and general manager of Ultra Mobility Anand Chandrashekar will announce details alongside TSMC CEO Rick Tsai in Santa Clara, California on March 2.

Intel spokesman Chuck Mulloy would not elaborate, while TSMC -- the world's biggest manufacturer of made-to-order chips -- was not immediately available for comment.

Intel announced in January it would shut plants in Malaysia and the Philippines and its one surviving factory in Silicon Valley, cutting as many as 6,000 jobs. At the same time, the firm plans to spend $7 billion over two years to build next-generation, 32-nanometer chip manufacturing capacity.

Top global chip maker Intel has steadfastly maintained it will manufacture its own microprocessors, but had previously outsourced some processes, including chipsets and wireless devices, to TSMC and other foundries, Mulloy said.

As the cost of chip production has skyrocketed, its peers and rivals, including graphics chip maker Nvidia, have migrated to fabless or "fab-lite" strategies. A deepening recession is now curtailing tech spending while exerting pressure on companies to safeguard profit margins by shaving costs.

Distant rival Advanced Micro Devices Inc is spinning off its own foundry company.

Speculation in technology publications from PC Magazine to EEtimes ranged from Intel outsourcing its Atom microprocessor -- found in ultra-small laptops called netbooks -- to a deal to transfer capacity.

Shares in Intel held steady in after-hours trade.

(Editing by Edwin Chan)

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