Intel’s best known marketing strategies target modestly, starts with less expectations or financial gains and slowly gain the market. It is perhaps the first time that Intel is entering a ‘Big deal’ of sale of a tiny 22nm fab capacity to another chipmaker.
Achronix announced the company’s decision to employ the Intel’s 22nm processes as the platform for its Field Programmable Gate Arrays (FPGA). This was confirmed by the Intel’s spokesperson Bill Kircos in his blog posting. However, Kircos stressed the small nature of the deal in his blog. He said that the company’s offer of selective access to the 22nm fabs is not significant enough for the financial gains and comprise value less than one percent of the shares.
The Achronix manufactures FPGAs typically on very slow processes and are relatively costly. The chip can be rewired using software and is suited to the manufacturers of small devices which require smaller chips. The Achronix is intending to manufacture ultra fast FPGAs It is planning to launch Speedster 22i with the Intel’s new process along with the current Speedster1. Both the FPGAs have 1.5GHz speed, but the latter consumes less power almost half of what required for the former and is relatively cheaper.
The Register points out national security to be the prime reason for this decision. The country was seriously concerned about the possibilities of a technology threat to the US military to gain entry through the chips imported from other countries. The only viable solution to prevent such a scenario was to use the native chips which is why Achronix is making a safer move towards incorporating Intel technology. This increases the acceptance level of Achronix among its military customers.
The small manufacturing firms like Achronix help the Intel to expand their native market. This also provides Intel with the possibilities in future to purchase and integrate these businesses into their core business. Intel has not been interested in small product manufacturing since long due to low income generation or huge costs associated with development and production in small numbers.
But Intel’s strategy is in the right mode with supporting smaller manufacturers like Achronix. These small companies do not offer serious competition with Intel. Intel can transfer a part of its risk to these smaller firms. And, if these smaller firms do get a sudden spurt of business, Intel also gets the option to integrate these smaller firms into the core business either in part or the whole firms. By the deal Intel gets an opening to new niches which will help in Intel’s growth.
Achronix on the other hand gets superior technology making it the leader among its competitors. In return, the Achronix products have to bear the label of Intel. This will result in a long deal of Achronix with Intel which in turn will ease the process of integration with Intel if ever the situation arises.
Intel is certainly on its way to declare more foundry deals of similar nature. But it is never going to follow the suit of IBM deals. Intel will definitely try to stay back as the manufacture of integrated devices. The deals with Achronix and other smaller companies will brighten the future of Intel’s business venturing into new areas and easing the process of mergers and take over.