South Korea’s tech behemoth LG Electronics Inc. will design its own chips for its smartphones and mobile devices and have them manufactured by Intel Corp.

According to sources on Wednesday, the world’s largest semiconductor maker Intel announced at the Intel Developer Forum in San Francisco on Tuesday that LG Electronics will use Intel’s foundry business to manufacture its own 10 nanometer mobile system-on-chips that will be released next year.

The Korea’s second biggest phone maker has been working hard to develop its own chips because using self-made chips have many advantages such as cost-cutting and better product optimization. It developed its first mobile application processor (AP) named Nuclun in late 2014 and applied it to its smartphone G3. It produced Nuclun at Taiwan Semiconductor Manufacturing Co. (TSMC), the world largest semiconductor foundry.

LG was forced to give up chip-making business amid government-led restructuring following the Asian financial crisis in late 1997.

An official from LG said that the 10 nanometer chipsets it will produce at Intel factories are still at a developmental stage and it will take some time to mass produce them. He also added that the company haven’t decided anything yet to which products it will apply the chips.

The industry watchers expect the mass production of the chips would begin in the second half of 2017.

Global smartphone makers such as Apple, Samsung Electronics and Huawei design and develop their own chips and other manufacturers generally use U.S.’s Qualcomm processors. “Using one’s own chips can have cost and other advantages, provided the processors can keep pace with rival chips,” said a technology news website Recode.

By Song Sung-hoon

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