Intel, for the first time, has agreed to manufacture another company’s chips at its most advanced factories. The move thrusts Intel, the largest and wealthiest chip maker, into the contract manufacturing business dominated by Taiwanese and Chinese companies.
Starting next year, Intel will make chips for Achronix Semiconductor, a small company based in Silicon Valley that designs a specialized type of microprocessor used to accelerate computing tasks like shuttling network traffic and encrypting data.
The tie-up, which the two companies plan to make public on Monday, would require Intel to give up only a small fraction of its manufacturing capacity, but it still is a major departure from Intel’s tradition of keeping its prized chip-making expertise to itself.
“We totally appreciate that our manufacturing techniques and factory network are the envy of the chip-making industry,” said Bill Kircos, an Intel spokesman.
Mr. Kircos played down the scope of the deal and the notion that Intel had become a contract chip maker. “For proper perspective, this agreement makes up much less than 1 percent of Intel’s total capacity,” he said.
But some analysts see the deal with Achronix as an indication that Intel intends to enter the contract manufacturing business in a more meaningful way.
“I think this is only the beginning of Intel manufacturing for others,” said Gus Richard, a microprocessor industry analyst with Piper Jaffray.
Intel has long held a manufacturing lead over its competitors in the PC and server chip markets, building chips with smaller components before rivals do. Those smaller pieces result in faster, cheaper, lower-power products. Historically, Intel has kept its collection of multibillion-dollar chip fabrication plants, or fabs, to itself to build the chips it designs in-house.
Meanwhile, a few other companies, most of them located in Taiwan and China, have specialized in building chips that other companies design. These companies engage in a fierce, expensive battle to attract customers like Apple, Nvidia and Advanced Micro Devices.
Mr. Richard said that Intel had struggled to build a major business beyond PC and server chips, and that working with other designers could help it simultaneously learn new markets while offsetting the cost of its factories.
“Manufacturing is their crown jewel, and they’re finding new ways to monetize it,” he said.
He and other analysts characterized the move as a mere dip of the toe into accepting business from other chip designers. Achronix is a minor player in the relatively modest-size market for F.P.G.A., or field programmable gate array, chips.
These chips fill a niche because they can be tweaked to push through specialized tasks at faster rates than the general purpose chips founds in PCs. Companies use these customizable chips to speed up things like routers and switches, and systems that handle digital signals and video. Increasingly, Wall Street has turned to them to speed their financial calculations, while oil and gas companies use the chips to power through geological data.
The worldwide market for these chips is about $3 billion, about one-tenth of the size of Intel’s annual revenue. Intel does not currently compete in the market.
By branching into manufacturing, even at a modest level, the company can gain some experience in building products for other designers, said Joseph Byrne, a chip industry analyst with the Linley Group. He said that came with challenges because Intel for the first time would need to meet the needs of external customers.
Mr. Byrne added that the move had the chance to heighten competition in the F.P.G.A. market, is currently dominated by two companies: Xilinx and Altera. Both companies rely on contract manufacturers for the chips they design.
John L. Holt, the chief executive of Achronix, said that tapping Intel as a manufacturing partner should allow the company to make faster, cheaper products than its rivals and expand the market for these chips.
“F.P.G.A.’s have been too expensive because the top ones cost in the $1,000 range,” Mr. Holt said. “We will sell them for $400.”
Mr. Byrne said Achronix in 2009 had virtually no market share but that it could make up ground quickly if the chips manufactured by Intel did deliver the expected cost and performance increases.
“This will greatly heighten the threat” that Achronix poses, he said.
But Mr. Richard of Piper Jaffray said that Xilinx and Altera remained well positioned and that it would be a “long stretch” to say that Achronix could quickly catch up.
Intel, on rare occasions, has made chips for other companies in the past, but never at its most advanced manufacturing facilities.
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