Intel and Arm will work together on chip manufacturing compatibility

Intel Corp (INTC.O) said that its chip contract manufacturing division will work with U.K.-based chip designer Arm Ltd in a bid to ensure that Intel's factories can make mobile phone chips, as well as other products that use Arm's technology, in an announcement made on Wednesday.

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Although Intel was once the world's leading manufacturer of central processing units (CPUs), its technological advantage in the manufacturing of central processors (CPUs) has long been blunted by rivals such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330. TW), a world leader in making chips for Apple Inc (AAPL.O), the world leader in manufacturing chips for customers such as Apple Inc (AAPL.O).

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Among Intel's turnaround strategies is the establishment of partnerships with other chip companies, especially those in the mobile phone sector, in order to expand its manufacturing capacity. The company has said that firms including Qualcomm Inc (QCOM.O), for example, are planning to use its factories as a design center for future chip designs.

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"The digitization of everything is causing a growing demand for computing power. Earlier, customers did not have much choice as to how to design their mobile devices around the most advanced mobile technologies," Pat Gelsinger, Intel's chief executive said in a statement.

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In turn, Arm (9984.T) is a major supplier of intellectual property to many chip companies, especially in mobile phones, and is to become publicly traded later this year. Arm is owned by Japanese technology investor SoftBank Group Corp (9984.T) and plans to go public this year. There are a number of partnerships Arm has in place with major chip contract manufacturers as a means of ensuring that its designs will be performed well in their manufacturing processes.

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TSMC and Samsung Electronics Co Ltd (005930. KS), the two companies that manufacture the vast majority of the world's mobile phone chips, will form a partnership on Wednesday that aims to put Intel on an equal footing with them. Samsung Electronics Co Ltd (005930. KS) and TSMC currently manufacture more than 85% of the world's mobile phone chips.