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.

Intel will continue along its own Atom roadmap, designing new Atom processors and will manufacturing them in its own fabs, the company said.

Intel (Santa Clara, Calif.) said the memorandum of understanding with TSMC would broaden the market opportunities for its Atom SoCs and accelerate deployment of the architecture through multiple SoC implementations. The agreement also extends TSMC's technology platform to serve the Intel Architecture market segments, the company said.

"We believe this effort will make it easier for customers with significant design expertise to take advantage of benefits of the Intel Architecture in a manner that allows them to customize the implementation precisely to their needs," said Paul Otellini, Intel president and CEO, in a statement.

The collaboration is intended to expand the Atom SoCs availability to customers for a wider range of applications through integration with TSMC's IP infrastructure, Intel said.

"We expect this collaboration will help proliferate the Atom processor SoC and foster overall semiconductor growth," said Rick Tsai, TSMC president and CEO.

The Atom processor serves as the basis for most netbook computers. The processor, Intel's smallest, features 47 million transistors, according to the company.

Products manufactured through the agreement with TSMC may find adoption in embedded CPU market segments such as mobile internet devices, smart-phones, netbooks, nettops and AC-powered consumer electronics devices, Intel said.

"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," said Malcolm Penn, CEO and chairman of market research firm Future Horizons, in a an emailed statement.

"These are the sort of no-nonsense 'just do it' decisions that helped make the chip industry (and in particular Intel and TSMC) great," Penn said. "It has powerfully raised the competitive stakes in the digital consumer electronics market."

Speculation about what Intel and TSMC were planning to announce has been building since last week, when Intel circulated a notice that it would hold a press conference with TSMC in Santa Clara Monday.