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Intel will start building ARM-based smartphone chips

Intel has entered into a new licensing agreement with competitor ARM to produce ARM-based chips in Intel factories. The deal, announced today at the Intel Developer Forum, is a strategic move from the Santa Clara, CA company to offer its large-scale custom chip manufacturing facilities, which include 10-nanometer production lines, to third-parties, including those using its rival’s technology. Intel’s new foundry licensing agreements also include deals to produce chips for LG Electronics, Netronome, and Spreadrum.

“I think it can make a real difference in the industry,” said Will Abbey, a general manager in ARM’s physical design group, at IDF today. “For me, it simply makes sense.” Intel will be tasked with producing ARM’s 64-bit cores and other hardware that companies like Apple, Qualcomm, Nvidia, and others base their chip designs off of. ARM-based chips power a majority of the world’s mobile phones, with many companies relying on either their own designs or those developed by Qualcomm.

AN INTEL-ARM DEAL PAVES THE WAY TO PRODUCING CHIPS FOR APPLE AND QUALCOMM

The deal is another reminder that Intel missed the boat on mobile. The company ceded ground to Samsung, Taiwan Semiconductor Manufacturing Co., and other chip makers who now assume the dominant and lucrative chip making role for smartphones that Intel has enjoyed with PCs for decades. Now, with PC sales declining, Intel is eager to make use of its foundry infrastructure to bring in new customers, even if it means developing chips it once hoped to design itself.

Though it seems like an admission of defeat from Intel, the move is not altogether surprising. Rumors began percolating a few years back that Intel was in talks with Apple to manufacture chips for the iPhone and iPad, both of which use processors with ARM-based architecture. For years, Apple has been forced to turn to Samsung and TSMC to produce its Ax chip line. So it makes sense the iPhone maker would be interested in reducing its manufacturing dependency on its central smartphone competitor.

With an ARM deal in place, Intel now has the licensing framework to grab its share of the iPhone chip business, pending of course any concrete deal with Apple. Given the proximity of a new iPhone launch next month and reports that Apple has already inked a deal with TSMC to produce the A11 chip for the 2017 iPhone, Intel may have to wait a while before it gets in on that business.

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