Intel is planning a partnership announcement with foundry TSMC today for the outsourcing of production of the Atom processor which is targeted at low power mobile phone designs.
See David Manners blog post -
Intel likes to build its own processors, but its fabs are so expensive that they require high margin products to justify the expense of building them, operating them and investing in the process R&D which the fabs use.
Putting the Atom out to foundry with TSMC will remove the manufacturing and process R&D overhead. At the same time, TSMC, in a downturn at the foundries as IDMs reduce their foundry business, is no doubt happy to offer Intel a good price.
There is another, possible reason why Intel is out-sourcing its parts. Intel traditionally can't do low power, it has always buili its ICs for speed. TSMC, which makes low-power chips for the wireless people like Qualcomm, can make low-power chips. That could be a major motivator for Intel going to TSMC.
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