Analysis: Intel, ARM seen on collision course

High-k or no k?
In a press event at Intel's headquarters here, Intel and TSMC outlined the deal, which, in turn, raised more questions than answers. For years, Intel has outsourced many commodity parts--such as chipsets and other products--on a foundry basis to TSMC.

But this is the first time Intel has outsourced a processor technology, which in itself is a ''teutonic'' shift, said G. Dan Hutcheson, chief executive of VLSI Research Inc. (Santa Clara, Calif.).

Intel has no plans to get out of the fab game and will remain an integrated device manufacturer (IDM), said Sean Maloney, executive vice president and chief sales and marketing officer at the company. The idea behind the deal with TSMC is to expand into new markets in a growing space, Maloney said. ''We want to go after embedded,'' he said at a press event.

Anand Chandrasekher, senior vice president and general manager of Intel's Ultra Mobility Group, insisted that the company will continue with its own Atom roadmap, designing new standalone Atom processors for a range of markets. As before, it will continue to make the Atom devices in its own fabs, he said.

Intel said it would transfer unspecified Atom IP to TSMC under the terms of a memorandum of understanding between the two companies. Intel said it would maintain control over which customers can access the Atom cores.

The Atom is based on Intel's 45-nm technology. It also includes Intel's prized high-k and metal-gate technologies. The Atom processor was built for low-cost netbooks and nettops.

The deal does not include manufacturing or process technology. That implies Intel has no plans to license or transfer its high-k process to TSMC.

Some believe that Intel will continue to develop and sell Atom processors based on high-k and metal gates. In contrast, TSMC will most likely offer Atom cores that have the same instruction set, but it is doubtful the devices will include high-k and metal gates.

So as a result, it's unclear--or perhaps unlikely--that the potential IP cores from TSMC will have the same performance levels as those from Intel, Broadpoint.AmTech's Freedman said.

On the other hand, there could be some major benefits for customers who go to TSMC for the Atom IP cores. TSMC has a large portfolio of proprietary and third-party IP, enabling customers to devise a wide range of system-on-a-chip (SOC) designs, he said.

Malcolm Penn, CEO and chairman of Future Horizons, added that Intel will be able to lower the cost for Atom in embedded applications by going with TSMC. ''Intel has shown the gutsy single-mindedness needed to win new chip markets and it has simultaneously not shirked the hard fact that its cost and marketing structure couldn't compete. It has powerfully raised the competitive stakes in the digital consumer electronics market,'' he added

On the other hand, Intel has previously fallen on its face in the arena. Several years ago, Intel made a bid for the network device, mobile phone and portable multimedia player markets with its StrongARM-derived PXA2xx and IXP4xx processor families.

Over time, Intel abandoned this effort and went back to the safety of the desktop. Will history repeat itself? Time will tell, but Intel needs new growth streams amid a tough, gloomy recession.