Intel's plans to beat rival ARM at its own game with a range of smartphone-oriented Atom chips looks set to be in jeopardy as the company's agreement with TSMC falters.

The agreement between the two companies - which saw Intel asking TSMC to produce Atom processors on its behalf - is being reported by ITworld as "on hold" as the two companies fail to agree on how to proceed.

The memorandum of understanding is believed to have related to producing low-power Atom SoC units for use in smartphones and tablets, but according to TSMC's chairman Morris Chang the partnership remains static and there has been "no news" from Intel for at least six months.

Intel spokesman Nick Jacobs responded to Chang's comments by stating that the company has "no short-term plans to bring an Atom processor manufactured at TSMC to market, [but] the relationship remains in effect and we are still working with TSMC."

If the cold feet are on Intel's part - as Chang's comments suggest - it could well be due to TSMC's recent deal with rival ARM, which sees the company producing ARM's Cortex processors - a product which competes directly with Intel's latest Atom chips.

Alternatively - and given that the cold-shoulder treatment appears to have started back before Intel could reasonably have known about TSMC's planned deal with ARM - it's a sign that Intel is re-thinking its Atom-based-smartphone approach: with ARM enjoying a comfortable monopoly in that particular market, Intel could well be re-evaluating its position and moving its attentions elsewhere.

Do you think that Intel's decision to apparently snub TSMC comes as a result of the latter's dealings with ARM, or is it a sign that Intel is giving up the smartphone fight before it's even begun? Share your thoughts over in the forums.
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