SANTA CLARA, Calif. -- In a move to capitalize on the new manufacturing model in cellular phones, Intel Corp. has established a supply-chain program for its flash memory customers in Taiwan. But the program is also aimed at keeping its flash chip competitors at bay in Taiwan, most notably Advanced Micro Devices Inc., according to analysts.
The first companies involved in Intel's new program include Taiwan's four largest cell-phone manufacturers: Acer Communications & Multimedia Inc., Arima Communication Corp., Compal Communications Inc., and GVC Corp.
The program will enable these cell-phone makers to obtain competitive pricing and a continuous supply of flash-memory chips based on Intel's StrataFlash architecture. The Santa Clara chip giant will also provide software porting and technical design assistance for Taiwan's cell-phone makers as well.
Analysts said they believe Intel is setting up the new program in order to sell more chips to Taiwan's fast-growing cell-phone industry. Intel also hopes to keep its flash-memory chip competitors from getting a strong foothold in Taiwan, namely AMD, analysts added.
For months, Intel, AMD, and other flash-chip makers have been battling each other for sockets in the cell-phone business.
Now, they will clash in Taiwan, where the stakes are huge. Although Taiwanese-based handset makers are not household names, they are becoming an integral part of the supply chain in this industry.
Foreign cell-phone suppliers are looking to reduce their costs and are turning to Taiwan for help. In fact, Taiwan-based companies--known as ODMs, or original design manufacturers--are making phones for Ericsson, Motorola, NEC, Siemens, among others. In Taiwan, ODMs perform design and manufacturing services for foreign systems suppliers.
Taiwan is becoming one of the world's leading makers of cellular phones. Last year, the island shipped 18 million handsets, representing about 5% of worldwide output, according to analysts.
Because of Taiwan's sudden presence in this industry, foreign cell-phone chip makers are scrambling to develop alliances with Taiwanese companies.
Cell-phone chip set makers--including Texas Instruments Inc. and Qualcomm Inc.--have develop strong ties with local companies. Conexant Systems Inc., RF Micro Devices Inc., and other radio-frequency chip makers have taken similar steps in Taiwan.
The next on the list are the flash-memory players, notably Intel. "Intel is [offering] this program to our 'ODM' customers [in Taiwan] because they rapidly adopt and produce new technologies," said Curt Nichols, vice president and general manager of Intel's Flash Products Group.