OAKLAND, Calif. July 25 Reuters U.S. chipmaker Intel Corp said on Monday it will produce chips for Taiwans MediaTek Inc, one of the world39;s largest chip design firms.

The manufacturing arrangement is one of the most significant deals Intel has announced since it launched its socalled foundry business early last year.

A foundry business builds chips that other companies design and Taiwan Semiconductor Manufacturing Co TSMC is the top player in that space. Intel has mainly built chips it designed itself.

That39;s a pretty big deal for us to engage a customer from Taiwan and them betting on us to grow and try this. And so this is a major anchor customer win, Randhir Thakur, president of Intel Foundry Services, told Reuters.

TechInsights chip economist Dan Hutcheson said there were doubts in the industry on whether Intel could pull off the foundry business, but the deal with MediaTek shows its on the right path and its investments, including in recruiting the right executives, are paying off.

When you go into a foundry, you39;re putting at risk about two years of work, said Hutcheson about the risk for chip design firms like MediaTek. If something happens and the foundry can39;t pull it off, you39;ve lost that design window in that market window.

While Intel didnt give any financial details of the deal or say how many chips it would be producing for MediaTek, it said the first products would be manufactured in the next 18 to 24 month period and will be in a more…