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Qualcomm: We won't take advantage of Intel's foundry-leasing right now

Qualcomm will take a wait-and-see approach before turning to Intel's expanding foundry operation to manufacture its chips, Qualcomm CEO Paul Jacobs said on Wednesday.

Speaking at the BMO Technology, Media & Entertainment Conference, Jacobs said established semiconductor foundries like Taiwan Semiconductor Manufacturing Company (TSMC) offer more "flexible" services than Intel is likely to provide for fabless chip design companies like Qualcomm.

Last month, Intel announced that it plans to open up its small semiconductor foundry business to more companies as part of a major strategic overhaul under a new leadership team headed by CEO Brian Krzanich.

"We're going to go much further. If we can utilise our silicon to provide the best computing, we'll do that. People who can use our leading-edge technology and build computing capabilities that are better than anyone else's, those are good candidates for our foundry service," Krzanich said during the company's annual Analyst Day.

Jacobs, however, intimated that Intel would have to change the basic way it manufactures semiconductors to meet the needs of companies designing mobile device processors and chipsets. The sticking point, he said, is that Intel's business model involves producing large volumes of one type of integrated circuit at its fabs to fine-tune yields over time and maximise use of capacity.

That's been a great strategy for Intel to meet its own production needs and pad its bottom line for decades, but it doesn't match up with what Qualcomm needs from a foundry partner, Jacobs suggested, according to a transcript of his conference talk published by Seeking Alpha.

Foundries like TSMC "have a different model right now for how they build their fabs and they're very flexible," he said.

"They can run multiple different products through them simultaneously and it's all software-controlled ... [whereas] Intel is famous, has been known for having a copy-exact model, so they need very large volumes of a particular chip to run through that," Jacobs said.

The Qualcomm chief said the production ramp for a new leading-edge chipset for a top smartphone was "almost like a movie launch."

"Things happen in the first small period of time, so you have to ramp incredibly fast, build a lot of capacity on the front end, which means that after that first wave [of volume production] has passed through, now there is a lot of foundry capacity left over," Jacobs said.

"And the fabless model has to be there in order for other people to absorb that, coming in later, for the later waves to absorb that. So I think the fabless model is very well-suited to the mobile space and to these kinds of leading-edge designs and so I think it's sort of necessary as a way of participating in the market."

He added that mobile chip design is moving in a direction "just from a cost standpoint" where leading-edge fabrication technology is being used for portions of a given chipset while other parts are fabbed using trailing-edge tech. This kind of partitioning will make packing technology more important than ever, Jacobs said.

Jacobs did leave the door open for a possible future relationship with Intel as a foundry partner.

"I mean, people change and so forth, so it's certainly interesting ... I am glad to hear that they're interested in going that way and we'll see how that plays out," he said.