Intel (NASDAQ:INTC) will manufacture semiconductors for Taiwan’s MediaTek, giving the U.S. company a big boost for its contract chipmaking business.
MediaTek is one of the biggest suppliers of smartphone processers and a rival to Qualcomm (NASDAQ:QCOM). Intel Foundry Services will manufacture multiple chips for MediaTek for a range of smart edge devices, the two companies said on Monday.
After taking over as CEO of Intel last year, Pat Gelsinger made revitalizing the foundry business a key priority in order to catch up with and break the dominance of its Asian rivals TSMC (NYSE:TSM) and Samsung. Via its foundry business, Intel will manufacture chips that other companies design.
The U.S. giant plans to spend more than $40 billion building fabrication plants around the world.
But the manufacturing of the most advanced chips is not something many companies can do and is in fact is dominated by TSMC and Samsung. These two companies account for more than 70% of global foundry revenue, according to TrendForce.
As demand continues to rise for chips, Intel and its Asian rivals plan to ramp up spending on foundries.
But Intel lags far behind, though gaining MediaTek as a customer will give the company a boost. MediaTek had 38% of the smartphone application processor market in the first quarter, making it the biggest company in the segment, according to Counterpoint Research.
INTC, known colloquially as “Mr. Chips”, saw its shares begin Tuesday up 32 cents to $39.48.
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