On April 12th, Intel announced that its foundry services division (IFS) will collaborate with UK-based chip design company Arm to ensure that chips based on Arm technology for mobile devices and other mobile products can be produced in Intel factories.

“Intel’s collaboration with Arm will expand IFS’s market opportunities and provide options for any chip design company that wants first-class CPU IP and open foundry capabilities with leading process technology,” said Intel CEO Pat Gelsinger.

According to Intel, the collaboration will include joint optimization of chip design technology, improving the PPAC (power, performance, area, and cost) performance of Arm chips based on Intel’s 18A (1A=10 nanometers) manufacturing process. In addition, Intel’s foundry division will provide optimized support for chip manufacturing, software, and packaging.

Arm’s primary business model is to sell chip IP (intellectual property) externally, and its customers include MediaTek, Qualcomm, Apple, and UNISOC. IP is not a chip, and external partners need to design their own chips based on it. This process is similar to how Qualcomm and MediaTek designed the Snapdragon and Dimensity chips based on Arm’s Cortex-A series processors.

This collaboration is beneficial for Intel to win more Arm chip orders and further expand its market range. In July 2022, Intel and MediaTek announced a strategic partnership. MediaTek will use Intel’s foundry services to produce a series of intelligent edge device chips, and the batch orders will be shipped in the next 18-24 months.

In addition to Arm chips, Intel is also open to the emerging RISC-V architecture chips for foundry services.

In March 2021, Pat Gelsinger, who had just been appointed as Intel CEO, announced the company’s “IDM 2.0” strategy, which includes continuing to complete most of the products internally while strengthening cooperation with third-party foundries to maintain its product leadership.

In terms of enhancing its own chip production capacity, Intel first invested $20 billion in building two new semiconductor factories in Arizona, USA. With the entry of Canadian asset management giant Brookfield, the investment scale expanded to $30 billion. In January 2022, Intel also announced the construction of two semiconductor factories in Ohio, with an initial investment of $20 billion. Intel also said that the Ohio site could accommodate up to eight semiconductor factories, and the total investment in the next ten years could reach $100 billion.

In addition, Intel plans to compete with TSMC to become the main provider of foundry services, providing services to global customers in the United States and Europe. At the same time, Intel has set up a new independent business unit, Intel Foundry Services, to support the production of x86 cores, Arm, and RISC-V ecosystems IP. Gelsinger has also stated that the cooperation between Intel and third-party foundries is expected to expand continuously, including producing core computing products for Intel’s client and data center departments from 2023.

With continued deterioration in demand for PCs and servers, Intel’s performance has been impacted. Its latest financial report showed that its revenue for the fourth quarter of 2022 fell 28% YoY to $14 billion, the lowest quarterly revenue since 2016. Net profit also fell 92% YoY to $400 million, far below market expectations. Among them, Intel’s semiconductor foundry business achieved revenue of $319 million for the quarter, an increase of 30% YoY, and revenue for the full year of 2022 was $895 million, an increase of 14% YoY.