Intel and Altera widen chip manufacturing agreement

SAN FRANCISCO, March 26 Wed Mar 26, 2014 11:00am EDT

SAN FRANCISCO, March 26 (Reuters) - Chipmaker Altera Corp is working with Intel Corp to combine separate components like processors, memory and programmable chips into customized devices in a technique aimed at reducing manufacturing costs and improving performance.

The new venture, to produce what are known in the technology world as 'multi-die' devices, builds on an agreement announced over a year ago for Intel to open its cutting-edge factories to produce Altera's programmable chips, Brad Howe, Altera's senior vice president of research and development, told Reuters late on Tuesday.

It also reflects strategy at Intel, the world's largest chipmaker, to look for growth opportunities in mobile devices, reducing the company's reliance on the slowing personal computer industry.

Both companies are contributing packaging and semiconductor expertise that will help Altera improve the performance of chips for communications, high-performance computing and military applications. "We're partnering to bring those technologies together in a single-package solution," Howe said.

Multi-die packaging is aimed at efficiently connecting separately made components as one device. Many of those components could be manufactured together on one silicon die, but in some cases the complexity of doing so can mean higher costs and lower yields of successfully produced components.

Connecting discrete components in sophisticated ways can also lead to smaller form devices that use less energy, and let chipmakers more easily mix and match components to produce different variations of chips.

Altera is betting that paying for access to Intel's factories equipped with new 14 nanometer trigate transistor technology will give it an edge over rival programmable chipmaker Xilinx Inc.

"Things are going exactly as we'd expect them to be going," Altera's Howe said. "We're very committed jointly to a successful program."

The deal to share Intel's prized manufacturing technology with Altera is the most notable of its kind so far for Intel. Chief executive Brian Krzanich said in November he wanted more customers.

Far behind rivals in making chips for smartphones and tablets, adding more manufacturing customers is one way for Intel to keep its multi-billion dollar factories operating at optimal levels.

In February, Intel said that a new facility built in Chandler, Arizona, originally slated as a $5 billion project to produce Intel's most advanced chips, would remain closed for the foreseeable future.

(Reporting by Noel Randewich; Editing by Kenneth Maxwell)

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