The Korea Times has reported that Cisco and Intel have penned a deal for Intel to fabricate future Cisco networking chips, although so far, neither company has made an official announcement regarding the deal.
Intel Korea Manager - Lee Hee-sung was quoted in the article as the source, but even without a proper company statement announcing the deal it is already sounding like a significant contract for both companies. Intel has been looking to expand their foundry business beyond their own hardware for quite some time, and the plan is now certainly gaining momentum. This latest deal is obviously a big one and is certainly going to bring in new cash flow for the company. Less known companies such as Netronome and Altera have been Intel's more recent customers, but Cisco are a company with quite a big reputation within the computer and technology industry.
The CPU market and of course the rest of the computer industry is still in a bit of a sales slump. Intel has a strong work force and plenty of fabrication plants with nothing better to do, so they may as well be leasing out their knowledge and experience to paying customers until such time as hardware sales pick up, or of course just expand this sector of their business permanently. At the end of the day, they need to make a profit just like any other company.
As to what products Cisco will have produced under the new deal is still unclear but it will most likely involve their new FPGAs (field programmable gate arrays). We await further confirmation from Intel who will no doubt share many more details of the new contract.