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Intel-TSMC venture a win-win for both

TAIPEI, Taiwan -- A possible joint venture between Intel Corp. and Taiwan Semiconductor Manufacturing Co. (TSMC) would create a win-win situation for both chip giants, reported the local Economic Daily News yesterday, citing institutional investors.

The report came after Intel Corp., the world's largest chipmaker, said it will make a “strategic announcement” with TSMC today.

The announcement may have to do with Intel outsourcing its memory products or Atom microprocessor to TSMC, Economic Daily reported, citing wire services. The Atom processor is specifically for small-sized notebook PCs.

Executives, including TSMC Chief Executive Officer Rick Tsai, will attend the event at Intel's headquarters in Santa Clara, Calif., according to an e-mailed statement. His presence indicates the importance TSMC has attached to the event.

Intel spokeswoman Megan Langer said she won't give further details until the announcement. TSMC declined to comment on the news conference, too.

Intel may be asking TSMC to make Nand Flash memory chips. Economic Daily reported, citing wire services. Intel's CEO Paul Otellini had said last week the company may outsource its Nand Flash memory products.

The partnership may also have to do with TSMC making the Atom microprocessor for Intel, as that is what Anand Chandrasekhar, a senior vice president of Intel, has implied, the report said.

Either way, the partnership would be good news for TSMC, as making chips for Intel would help the Taiwan-based company xincrease business and capacity utilization rate amid the current downturn, the report said, citing unnamed institutional investors.

TSMC had one time made Nor Flash memory chips for Spansion, yet it eventually terminated the contract due to disagreements over quantity and prices. If TSMC were to make Nand Flash products for Intel, it would mark a return of TSMC to the memory chip business.

TSMC uses the “bulk logic” manufacturing technique to make its chips, the same process used by Intel. This is an advantage for TSMC as it gets orders from Intel, the report said.

TSMC is already making the north-bridge and south-bridge chips compatible with the Atom processor, the report said. North-bridge and south-bridge refer to different parts of chipsets.

As for Intel, outsourcing its products to TSMC would also be a plus, the paper said. The chip giant has closed five fabs amid the recession, giving rise to the need to outsource its operations.

Intel dominates the market for computer microprocessors, the main electronic component in personal computers. Taiwan Semiconductor is the biggest maker of chips designed by other companies. The two have some of the most advanced chip plants in the industry and, with South Korea's Samsung Electronics Co., are the biggest spenders on production technology.

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