Intel is in talks with Silicon Integrated Systems (SIS) to use its chipsets for entry-level motherboards, according to a report circulating on Chinese news wires this morning.
The Chinese publication Commercial Times is reporting that the unit of United Microelectronics Corp. (UMC) has secured an order from Intel for low-end chipsets, but cites no sources.
According to the story, SIS’s chipsets will be a component of Intel’s motherboards as soon as October. The article noted Intel’s decision to stop making the chips in-house due to poor margins.
UMC, which has no wafer fabs of its own, is allocating more of its capacity to its chip-design unit to accommodate Intel’s order, the story said. Neither Intel or SIS were immediately available for comment on the report.
Sarang Ghatpande, vice president and senior analyst, Ideas International, told TechNewsWorld he is surprised to see this report because Intel has an initiative to sell the whole platform rather than just the chipset.
“By outsourcing that they may not be able to gain that platform benefit, which is the whole reason for regrouping the company with the Digital Enterprise Group,” Ghatpande said. “Even though processors are the most well-known part of the company, Intel has a pretty strong research and development team to try to bring an entire platform solution to the customer.”
Analysts said there is immense competition with third-party chipset makers adding value to components, but Intel is still a market leader that continues to innovate to maintain its edge.
“I would think Intel would like to control the design and development of its chipsets, because that’s where they could provide some value above and beyond some other third-party vendors and can also provide again the whole platform,” Ghatpande said. “However, Intel seems to be trying to bring something to market at a significantly lower price point for emerging markets where there is there is no perceived difference among the users.”
New Stateside Manufacturing Plants
Intel is also busy manufacturing its platform-based chipsets in the U.S., with two new plants coming on line.
In July, Intel announced plans to invest US$3 billion in a new U.S. manufacturing facility in Arizona. Work at the 1 million-square-foot plant, known as Fab 32, was scheduled to begin immediately and employ about 1,000 people when it is in full operation.
Intel also said it would invest $105 million to upgrade an existing plant in nearby New Mexico, converting the dormant factory into a new temporary test facility.
Taken together, the moves are seen as a sign of the confidence Intel has in the chip sector over the next several years. Since the new construction in particular will take two years or more before it is on line, analysts viewed the move as a sign that Intel is bullish on the long-range demand for its products.