The Oregon plant is the last remaining fab at IDT. The move is aimed to cut costs at the chip maker. Under the terms, IDT and TSMC have entered into a foundry agreement. The plan is to transfer product fabrication processes and related activities currently running in IDT's Hillsboro, Ore.-based fab to TSMC's plants.

The product processes and geometries transferred under this agreement include existing IDT products currently manufactured at the Fab 4 facility in Hillsboro at 0.13-micron process technology and above.

These processes and products will be transferred to TSMC over the ensuing two years. The agreement does not include transfer or sale of the process equipment or the IDT facility located in Hillsboro.

IDT intends to exit the Hillsboro wafer fabrication facility at the end of the transfer period and has engaged a third-party to market the facility to potential buyers that can continue fabrication operations.

At present, there are no plans for layoffs at the fab right now, according to a spokesman for IDT. At the fab, IDT employs a ''few hundred'' people, he said. Depending on the outcome of the fab, the company could take a charge of $10-to-$25 million.

For some time, IDT has been working with TSMC and other foundries, such as Chartered and UMC. Despite the deal with TSMC, IDT is still ''open'' in working with other foundries, the spokesman said.

The transfer, which has already received approval by both companies and the IDT board, is expected to take up to two years to complete and will cover the lifecycle of all products involved.

''Over the past year or so, IDT has been shifting gears towards developing application specific solutions for the communications, computing and consumer markets. Obtaining an agreement with TSMC enables us to take full advantage of their cutting edge manufacturing processes and geometries and is the logical next step in our transformation," said Mike Hunter, vice president of worldwide manufacturing for San Jose-based IDT, in a statement. "It also officially starts the countdown for IDT to move from a fab-lite to a fab-less model.''

"The fab-less model enables IDT to focus our resources and investments on innovative new product development where we can leverage our core strengths in definition and design differentiation, while outsourcing manufacturing to the industry leader," said Ted Tewksbury, pesident and CEO of IDT. "This initiative is a key enabler of our mixed signal strategy as IDT's products transition to more advanced process technologies supporting higher levels of speed, complexity and integration."