According to reports, including those from The Wall Street Journal and the Economic Daily News in Chinese, a strategic alliance on Atom chip production is on the cards between Intel and TSMC - Taiwan Semiconductor Manufacturing Company.

Along with the proposed collaboration about the manufacturing of silicon related to the Atom chip, which is used broadly in Netbook processors, Intel and TMSC would likely be cooperating in some other areas also.

The forthcoming Atom processor, which has been code-named Moorestown, will be launched either late this year or early 2010. The single chip package will be a System-On-a-Chip (SOC) that will coalesce the processor, memory controller, graphics, and video encode-decode. The processor will have an add-on chip offering functions like storage, wireless, and Input-Output.

For Intel, which takes pride in manufacturing in-house chips, the outsourcing chip manufacture, though a nonconforming move, will not be a first-time decision - earlier too Intel has relegated manufacture of select silicon to external manufacturers.

As such, Intel's projected alliance with TSMC - the world's largest contract chip manufacturer making SOCs for companies like Qualcomm and Texas Instruments - is not surprising!

The company plans to equip all its future high-end smartphones with the "x86" architecture-based SOCs. Moreover, the chipmaker's recent agreement with LG Electronics implies that Intel's Moorestown processor will also be a part of LG's upcoming smartphones!