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Posted : 2013-03-04 16:57
Updated : 2013-03-04 16:57

Samsung challenged by Intel's foundry biz

By Kim Yoo-chul

Intel is looking for additional revenue streams by bolstering its presence in the highly-promising logic chip business ― a potential threat to its biggest rival Samsung Electronics.

Industry sources said Monday that the semiconductor giant is desperate to look into other businesses amid the rapid growth in tablets and smartphones.

The industry's changing trend means that the PC segment is no longer Intel's growth driver.

The U.S. company has remained ahead of the competition with its state-of-the-art chip-manufacturing plants. This business model did work well when Intel was dominant in the so-called "PC era."

Headquartered in Santa Clara, Intel has more than 80 percent market share in PC processors. It sells those chips to computer manufacturers such as Hewlett-Packard (HP).

"Intel's top management has reached a broad consensus to diversify business portfolios because its old business models don't work amid the continued consumer shift for portable Web-connected items such as smartphones and tablets," said HMC Investment analyst Noh Geun-chang.

Noh said the logic chip sector has the greatest potential of becoming another growth engine for Intel.

Officials from the company in Korea weren't available to comment about its updated business plans.

Intel is now focusing on a foundry business, contract-based chip manufacturing. Clients design the chips they want, while chip manufacturers produce them.

Intel has so far been very passive on foundry business.

However, as the global market for conventional memory chips is already saturated, more chip manufacturers are joining the foundry business sector with Intel as the latest one.

Intel signed a contract with Altera, a designer of processors used in phone-network equipment, to manufacture future versions of Altera's chips.

According to the agreement, Intel is going to build so-called field programmable gate arrays or FPGAs, for Altera when the two chipmakers move to very-fined 14-nanometer processing technology.

Samsung officials said it is closely monitoring Intel's growing appetite for its logic chip business, adding that the firm will build additional logic chip-making facilities as its foundry output volume rises.



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