November 1, 2010 / 4:53 AM / 9 years ago

Intel manufactures cutting-edge chips for startup firm

SAN FRANCISCO (Reuters) - Intel Corp will make microchips for small design firm Achronix Semiconductor Corp, the first time the world’s largest chip maker is sharing its cutting-edge manufacturing technology with another company.

Intel has agreed to make Achronix’s field-programmable gate array chips, or FPGAs, using its 22-nanometer process, which is expected to go into production in the second half of next year, Intel spokesman Bill Kircos said in a blogpost.

“This deal would only make up a tiny amount of our overall capacity, significantly less than 1 percent, and is not currently viewed as financially material to Intel’s earnings,” Kircos said. “But it’s still an important endeavor for us that we’re committed to deliver on.”

San Jose, California-based Achronix said on its website that its Speedster22i chips manufactured by Intel would boast 300 percent higher performance than other FPGAs, which are chips that customers configure for their own uses after they are made.

Achronix, whose investors include Argonaut Private Equity and Battery Ventures, designs microchips to be used in networking, telecommunications, high-performance computing and industrial uses.

Intel and its competitors invest heavily in science to improve the performance of their microchips while shrinking their size and cost.

The cost of building ever-more-sophisticated fabrication facilities is climbing, so making chips for companies outside of its own markets could help Intel get more bang for its buck.

“A factory today is three or four or five billion dollars and it’s going up. If you want to stay in the business you’re going to have to continue to aggregate more volume,” said Auguste Richard, an analyst at Piper Jaffray.

Manufacturing Achronix’s chips also gets Intel’s foot in the door in the FPGA market, which is small but expected to grow over the next few years.

Last month, Intel unveiled plans to spend between $6 billion and $8 billion on high-tech manufacturing facilities in Arizona and Oregon.

That construction is aimed at outfitting the plants to manufacture Intel’s 22-nanometer microprocessors, expected to go on sale in early 2012 and create room to build smaller, better performing devices with longer battery life.

Manufacturing Achronix’s wafers at its 22-nanometer facilities doesn’t mean Intel is giving away its closely guarded technological secrets.

“Just because GM lets you drive their car doesn’t mean you’re going to know how to build it,” Richard said. “They don’t really have access to the manufacturing process; what they’re getting is the ability to build wafers on it.”

Reporting by Noel Randewich; Additional reporting by Sakthi Prasad in Bangalore bureau; Editing by Richard Chang

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