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Speculation As Intel, TSMC Set To Make “˜Strategic Announcement’

March 1, 2009

Intel and TSMC are set to make a “strategic announcement” on Monday, causing many in the industry and media to speculate that the No. 1 chip maker might start outsourcing its critical manufacturing, according to a Reuters report.

In a statement emailed on Friday, Intel said its head of sales, Sean Maloney, and general manager of Ultra Mobility, Anand Chandrashekar, will join TSMC CEO Rick Tsai to announce the details in Santa Clara, California on March 2.

An Intel spokesman would not elaborate on the matter, while representatives of TSMC were not available for comment, according to Reuters.

In January, Intel announced it would shutdown plants in Malaysia and the Philippines along with its one surviving Silicon Valley factory, eliminating up to 6,000 jobs.  Meanwhile, the company plans to spend $7 billion over 24 months to build next-generation, 32-nanometer chip manufacturing capacity.

While Intel has previously outsourced some processes, such as chipsets and wireless devices, to TSMC and other foundries, the company has adamantly maintained that it will manufacture its own microprocessors.

Intel’s peers and rivals, including graphics chip maker Nvidia, have moved toward fabless or “fab-lite” strategies to combat the surging costs of chip production.  Meanwhile, a deepening economic slowdown is limiting tech spending and pressuring firms to safeguard profit margins by cutting costs. Indeed, Advanced Micro Devices (AMD), a distant Intel rival, is spinning off its own foundry company.

Speculation was widespread in technology publications ranging from EEtimes to PC Magazine, and included theories that Intel might outsource its Atom microprocessor, found in ultra-small laptops known as netbooks, or that the company might strike a deal to transfer capacity.

Shares in Intel held steady in after-hours trading on Friday.

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