Intel and MediaTek this week announced a major new foundry partnership, in which MediaTek will manufacture chips targeting Internet of Things (IoT) and edge applications using Intel Foundry Services’ (IFS) advanced process technologies. This new strategic partnership is not only a significant win for both parties but will also have profound impacts on the global chipset supply chain and U.S. chipset ecosystem, significantly helping these industries in their efforts to delocalize manufacturing processes away from Asian (Chinese) dominance and closer to American Original Equipment Manufacturers (OEMs).
Since the appointment of Pat Gelsinger as Chief Executive Officer (CEO) in 2021, Intel has implemented a long-term strategy to regain its position as a market-leading foundry by 2025. IFS was launched in 2021 to support this goal by opening Intel Foundries to the third party’s Intellectual Property (IP) and to rival fabless chipset suppliers. The company has made considerable investments into the division, with construction commencing on two new plants in Arizona in 3Q 2021, followed in 1Q 2022 by a US$20 billion investment into a further two fabs in Ohio. The company also aims to leapfrog industry leader Taiwan Semiconductor Manufacturing Company (TSMC) technologically by producing 2 Nanometer (nm) chips in 2H 2024. Thus, securing MediaTek, the world's fourth largest fabless company and a leading TSMC customer, as a new client should be seen as a major vote of confidence in Intel’s foundry services, and proof that the strategy is bearing fruit.
It is also significant that the Intel/MediaTek foundry partnership announcement comes the same week that the U.S. Senate and House of Representatives are due to vote on the CHIPS Act, which aims to bolster American semiconductor supply chains and production competitiveness with Asia through a US$52 billion package of subsidies and tax credits for the industry. As America’s foremost semiconductor manufacturer, Intel is well positioned to become one of the main beneficiaries of the CHIPS Act, and the addition of MediaTek to its client list only boosts its case.
MediaTek’s chipset output has been increasing at a rapid pace over the past several years, with total revenue increasing 53% between 2020 and 2021, jumping from US$10.8 billion to US$16.5 billion. Yet, to date, the fabless company’s manufacturing has been concentrated in Asia, resulting in its U.S.-based clients suffering greatly during the supply chain disruptions of the past 24 months, with many left fighting for supply and suffering lead times triple those of pre-pandemic. The fabless company, therefore, has much to gain from the foundry partnership with U.S.-based Intel, as it will allow production closer to its American customers, unlocking more efficient execution and faster processes across the entire supply chain. This will come as welcome news to all American OEM/Original Device Manufacturers (ODMs) and module vendors seeking to build more stable and resilient supply chains through onshoring.
The chipsets that MediaTek intends to manufacture at IFS will mainly target IoT and edge applications, including smart home, residential and Small Office/Home Office (SOHO) Customer Premises Equipment (CPE), and other edge devices. The company’s current portfolio in this domain includes the Genio platform, announced this past May, which supports edge performance and advanced multimedia capabilities. The series encompasses the premium Genio 1200, the retail-focused Genio 500, the consumer-targeted Genio 350, and the Genio 130, intended for ThinOS and cloud-supported voice assistant devices. Chipsets within the Filogic series, including the Filogic 130 and 130A, are also designed to bring Wi-Fi 6 and Bluetooth 5.2 to IoT devices. With U.S. Machine-to-Machine (M2M) IoT connections forecast to increase from US$2.5 billion in 2022 to US$5.2 billion in 2026, the proximity of MediaTek’s solutions to the U.S. consumer will place the company well to serve vendors in this market.