Given this plan, it’s unlikely that Intel Corporation (NASDAQ:INTC) would pursue any foundry work that harms the competitiveness of the Intel Architecture (x86) platform or major customers and allies that depend on it, including Microsoft Corporation (NASDAQ:MSFT), HP, Dell, and Lenovo. Intel making ARM processors for anyone, especially Apple Inc. (NASDAQ:AAPL), would certainly do this.
Altera deal no impact on Intel’s core business
The foundry agreement with Altera Corporation (NASDAQ:ALTR) had no impact on Intel Architecture competitiveness. Altera is a small (market cap $11.2 billion) IC maker whose main product is the FPGA (Field Programmable Gate Array), a type of IC in which the silicon device logic is programmable. Although Altera Corporation (NASDAQ:ALTR)a produces other types of chips, including ARM processors, the agreement only covered the production of FPGAs. FPGAs are widely used in communications and processing and are essentially neutral devices in the Mobile Internet Wars being fought by Apple, Google and Microsoft Corporation (NASDAQ:MSFT).
It’s not even clear that the Altera Corporation (NASDAQ:ALTR) deal will help with capacity underutilization, since it involves using Intel Corporation (NASDAQ:INTC)’s most advanced 14 nm process at some time in the future. The 14 nm process hasn’t yet seen use in production of Intel Architecture processors.
Even the threat of an agreement with Apple Inc. (NASDAQ:AAPL) represents a slap in the face of Microsoft, but this would not be beyond the pale for Intel. Intel must be frustrated with Microsoft’s dalliance with ARM in the tablet and phone space, so the leaked report might be Intel’s doing.
Not ready to capitulate
However, agreeing to become an ARM device foundry would amount to a massive capitulation on the eve of Intel’s assault on the ARM mobile device sphere. If Intel’s plans lacked credibility, then I could see them wanting to hedge their bets, but Intel Corporation (NASDAQ:INTC)’s threat to ARM is quite credible. Intel might not succeed, of course, since in war no outcome is certain, but abject surrender at this stage is certainly premature.
How do such rumors take on a life of their own? Reuters started talking up the Apple Inc. (NASDAQ:AAPL) angle on Feb. 25, even before it could report the supposed Intel/Apple meeting. This seems to be a case of “helpful” advice as rumor. Evidently, the folks at Reuters think that an Intel/Apple collaboration would be a good idea, so they report it as if it were (almost) real. We regularly see the same phenomenon with rumors about an Apple television.
The article Intel’s Foundry Business: Sideline or Strategic Thrust? originally appeared on Fool.com and is written by Mark Hibben.
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