July 27, 2022: -Intel will manufacture semiconductors for Taiwan’s MediaTek, which gives the U.S. company a significant improvement for its contract chipmaking business.

MediaTek is one of the largest smartphone processor suppliers and a Qualcomm rival. On Monday, the two companies said that Intel Foundry Services would manufacture multiple chips for MediaTek for various intelligent edge devices.

After taking over as CEO of Intel in the previous year, Pat Gelsinger made revitalizing the foundry business a key priority catching up with and breaking the rule of its Asian rivals, TSMC and Samsung. Through its foundry business, Intel will manufacture chips that different companies design. The U.S. giant was planning to spend more than $40 billion building fabrication plants worldwide.

“The agreement is scheduled to help MediaTek build a more balanced, resilient supply chain by adding a new foundry partner with huge capacity in the U.S. and Europe,” Intel said in a press release.

NS Tsai, a corporate senior vice president at MediaTek, says that the partnership with Intel “provides value” to the firm as it seeks “to create a diversified supply chain.”

TSMC is MediaTek’s leading manufacturing partner for chips. It is not clear what MediaTek semiconductors Intel will be looking for.

Chip companies worldwide have been strengthening their supply chains and diversifying production between a global chip shortage that has persisted since the previous year.

But the manufacturing of advanced chips is not something many companies can do and is dominated by TSMC and Samsung. These two companies account for over 70% of global foundry revenue, according to TrendForce.

As demand for chips grows, Intel and its Asian rivals look to ramp up spending on foundries.

But Intel lags far behind, though gains MediaTek as a customer will boost the company. According to Counterpoint Research, MediaTek had 38% of the smartphone application processor market in the first quarter, making it the massive company in the segment.