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Intel Hardware

Intel Recruits TSMC To Produce Atom CPUs 109

Posted by ScuttleMonkey
from the plug-and-play-companies dept.
arcticstoat writes "Intel has surprised the industry by announcing a memorandum of understanding (MOU) with Taiwanese silicon chip maker TSMC to manufacture Atom CPUs. Although TSMC is already employed by AMD, Nvidia and VIA to make chips, it's not often you see Intel requiring the services of a third fabrication party. Under the MOU, Intel agrees to port its Atom CPU technology to TSMC, which includes Intel's processes, intellectual properties, libraries and design flows relating to the processor. This will effectively allow other customers of TSMC to easily build Atom-based products similarly to how they might use an ARM processor in their own designs. However, Intel says that it will still pick the specific market segments and products that TSMC will go after, which will include system-on-chip products, as well as netbooks, nettops and embedded platforms."
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Intel Recruits TSMC To Produce Atom CPUs

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  • Re:Nice Intel (Score:4, Informative)

    by macraig (621737) <(mark.a.craig) (at) (gmail.com)> on Monday March 02, 2009 @07:32PM (#27046093)

    Did you read or just fire from the hip? I think you're inferring a fact not in evidence; no fab closure was mentioned in the ARSTechnica report about this. In fact, it was stressed that this was an agreement for fabbing projects in addition to what both companies had independent of each other.

  • by Ninnle Labs, LLC (1486095) on Monday March 02, 2009 @07:35PM (#27046131)

    Neither company has revealed which manufacturing technology will be used to make the Atom chips, but Maloney hinted that the CPUs would be built on a 32nm process, saying that "both companies have a sense of urgency, and both companies want to make things as advanced as they can."

  • Re:Nice Intel (Score:2, Informative)

    by Yarhj (1305397) on Monday March 02, 2009 @07:57PM (#27046351)

    Semiconductor companies have been opening plants in China due to strong government incentive programs. China has been trying to shake the stigma off that "Made in China" sticker by bringing in more R&D and high-tech manufacturing with big corporate tax breaks and other goodies.

    I remember reading that the government of one Chinese province was actually paying the majority of the construction costs for a new fab, but I can't remember the Province, or the company which was going to use the fab. I'll try to dig that info up.

  • by MaWeiTao (908546) on Monday March 02, 2009 @08:10PM (#27046467)

    Obviously you know nothing about Taiwan. This isn't China we're talking about. They do have nationalized health care, although they are plagued with the same problems such programs face in Europe everywhere else. They are required to pay some level of compensation for overtime, but it isn't extravagant. They do have guidelines for worker safety and labor laws are fairly stringent. Not quite to the extreme of the US, but it is moving in that direction.

    Taiwan does have lower slightly lower corporate taxes than the US and last year I know the proposal was made to lower by 5% I believe, but I don't know if it ever went through. The US could easily address this situation, but the Obama administration seems intent on doing the opposite.

    They do have unions in Taiwan although I'm not aware of one for the semiconductor industry; unions aren't necessarily a good thing anyway. I do know from personal experience that jobs in the semiconductor industry, everything from engineering on down to manufacturing, are in high demand. They pay quite well.

    Wages certainly are lower in Taiwan than the US, by a good bit, but they are also significantly higher than in China. The key distinction is that quality is guaranteed and the companies are more trustworthy. It's very unlikely a Taiwanese company is going to go behind your back rip off your designs.

    Companies outsource to Taiwan or Korea when they don't want quality close to what could be gotten out of Japan but without paying the excessive cost. Companies go to China when they want maximum savings even at the expense of quality.

    That said, nowadays even Taiwan, Japan and Korea are outsourcing some of their manufacturing to China because even for them it's not as cost-effective as they'd like. The problem is that many people still lump Taiwan together with China so not only are they incapable of competing on price, but they're stuck with the perception of making cheap knockoffs.

    Of course, the Taiwanese government bureaucracy is at fault for doing a piss poor job of marketing their own country in every way. And Taiwanese companies are a bit too reluctant to give up OEM manufacturing. They should be building their own brands on the level Korea has done over the last decade or so. Of course, Korean companies have had heavy government backing whereas Taiwanese companies have generally been left to fend for themselves.

  • Re:Nice Intel (Score:4, Informative)

    by feyhunde (700477) on Monday March 02, 2009 @08:13PM (#27046495)
    TSMC is also known as Wafertech and has a massive fab just across the river from intel's main R&D fabs in Portland. So they are incredibly easy to access.
  • by zaft (597194) on Monday March 02, 2009 @08:50PM (#27046769) Homepage
    The press I have seen specifically said that Intel was NOT licensing any of its process technology.
  • Re:Nice Intel (Score:2, Informative)

    by _avs_007 (459738) on Monday March 02, 2009 @09:27PM (#27047043)

    In addition, the fabs that were closed are not compatible with the process that makes the Atom... So that means outsourcing to TSMC is not costing any US jobs, especially when you consider what markets Intel is trying to go after with this. (ie, markets they are not currently in)

    And FWIW, not all TSMC operations are overseas. There is a TSMC fab in the Portland metro area.

  • Re:Nice Intel (Score:3, Informative)

    by Chabo (880571) on Monday March 02, 2009 @10:13PM (#27047287) Homepage Journal

    I'm relatively new at Intel, but it seems to me that the employees knew this was coming eventually, regardless of economic conditions.

    Intel tends to use a fab for several years, until that process technology has become outdated. At that point, they close down the fab, selling it off about half the time, and starting the long task of re-tasking the fab for a smaller process the other half. The fabs being closed in this case are all on a process greater than 100nm -- remember that with the Prescott, launched in early 2004, Intel moved the P4 from 130nm to 90nm.

    This isn't like GM closing down a factory, this is more like a school building a new facility because their old one asbestos, and old wiring. They could just renovate the current building, but it would be easier and less costly to make a whole new building, even if that means Timmy can't walk to school anymore.

  • Re:Nice Intel (Score:4, Informative)

    by digitalunity (19107) <digitalunity.yahoo@com> on Tuesday March 03, 2009 @12:31AM (#27047929) Homepage

    Wafertech is a subsidiary of TSMC, so pretty close.

    Also, as to reasons Intel might want to move some production to TSMC....

    • TSMC excels at low to medium volume custom ASIC production. This aligns with the Atom business model nicely.
    • Labor dollars are a fractional cost of the price of an Intel chip, but with 401k contributions and healthcare coverage, it certainly does add up.

    Feyde is that you?

  • by tlhIngan (30335) <slashdotNO@SPAMworf.net> on Tuesday March 03, 2009 @12:59AM (#27048075)

    I wouldn't be surprised if the Atom profit margin is higher than an average desktop CPU (obviously not the $1000+ i7s, but I doubt margins are high on the typical low-clocked dual-cores that compete with Athlons). Sure, the profit per sale is lower, but it they sell more then that compensates.

    I have one Atom system here already, and I'm thinking of building a couple more in the next year because they're cheap, run Linux decently and use relatively little power; I wouldn't buy three Core 2s in a year.

    Actually, Atom chips in quantity are really cheap. We're talking in the range of $12 each for the low-end models, and maybe $70 for the super high-end ones. The margins aren't huge.

    In fact, Ars Technica speculates the reason for outsourcing to TSMC is that fabs are expensive, and making large volumes of low-margin parts (that may or may not sell) may not pay for the expensive shiny new 32nm fab Intel is rolling out. Instead, Intel will let TSMC do the investment in their fabs, and have them amortize the cost of the fabs among all its customers. Intel's 32nm fab will be used to make higher margin chips. If the new 32nm Atoms sell poorly, then Intel just reduces the quantity ordered from TSMC. If they take off and Intel finds their 32nm fab has spare capacity, hey, make more.

    http://arstechnica.com/hardware/news/2009/03/atom-cant-feed-rd-monster-intel-outsources-chips-to-tsmc.ars [arstechnica.com]

    Basically, Intel's betting that people will want higher-margin higher end chips, and that the whole market won't suddenly collapse into purchasing Atoms only. Thus, rather than risk making Atoms on an expensive new fab line that may not sell, make chips that will probably sell and pay off the fab sooner. TSMC's 32nm fabs will be paid for partly by Intel, and mostly by all the other customers of TSMC.

  • Re:Nice Intel (Score:1, Informative)

    by Anonymous Coward on Tuesday March 03, 2009 @02:40AM (#27048481)

    When DEC was bought out, Intel acquired StrongARM from Compaq. It was supposed to be really good, but it never really worked out for them. They later sold it off. I assume they made a profit, but there wasn't a culture around alternative instruction sets. That was a few years ago, so Atom is their attempt to re-enter the market.

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