The deal with TSMC is not the first time that Intel has tried to manoeuvre into the embedded space by signing up a company to make chips for customers to whom it cannot sell a standard product. However, it did take me a while to remember and then find the reference.
Way back in the summer of 1992, Intel cut a deal with VLSI Technology – now part of NXP Semiconductors and the original contract supplier of ARM processors to Acorn Computer and Apple – to help customers develop application-specific ICs (ASICs) based on the 386SL. Although the 486 was in full swing by then and the first Pentium was due a year later, Intel thought its 386SL could make inroads into the market for PDAs.
Intel invested $50m in VLSI, providing the chip giant with a 20 per cent shareholding – somewhat different to today's deal with TSMC – and a licence to use the 386SL. Although VLSI planned to make an integrated processor called Polar, the companies called the deal off in 1994.
The initial customer was to have been Compaq and everybody was talking the deal up through 1993. But things did not turn out as planned: Apple's ARM-based Newton was floundering by mid-1994 and the market forecasts for handhelds were not looking realistic. From VLSI's 10Q financial statement for 3Q94:
"To date, the handheld market has not developed per initial expectations. The Company now believes that significant uncertainty exists as to the revenue potential of the handheld market in general. As a result, the Company and Intel, its partner in the Polar development effort, have canceled further production of the Polar product and in early November 1994, terminated the amended July 8, 1992 Technology and Manufacturing Agreement between the companies. In addition, the parties are exploring alternatives to carry out Intel's expressed desire to dispose of its equity ownership position in the Company."