MediaTek and Intel have announced that some MediaTek processors will be manufactured by Intel Foundry Services (IFS). Currently, this manufacturing arrangement will concern “smart edge devices,” a pretty vague description that could encompass anything connected to a Wi=Fi/4G/5G wireless network.

That said, IFS currently operates 22nm (nanometer) Fabs, which could serve MediaTek’s Wi-Fi chipset line of products, for example. We don’t have enough data to assess which products Intel will work on.

It’s a big win for the young (2021) Intel foundry services business as MediaTek has gathered a lot of momentum in the past two years, breaking records quarter after quarter. MediaTek has launched extremely competitive platforms with a significant market share in the smart devices business.

From MediaTek’s standpoint, it’s a diversification move as Intel is expected to expand/open manufacturing plants (“Fabs”) in the USA and Europe. Such diversification would protect MediaTek from supply-chain shocks as we’ve seen since the Pandemic or potential geopolitical issues related to Taiwan.

Unsurprisingly, MediaTek currently contracts TSMC in Taiwan to manufacture most of its chips. Although TSMC does a stellar manufacturing job, it is so big that it could be a single logistical choke point if any catastrophe happens. Geopolitics aside, Taiwan is also subject to Typhoons, droughts, and Earthquakes.

It will probably take years for the semiconductor industry to surpass the current supply-chain issues. However, the diversification plans would make it much more resilient than it is today, even though the economics might not be as optimum as pre-2020.

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