Intel Corp, the world's largest chip maker, will outsource its Southbridge chips to Taiwan-based Advanced Semiconductor Engineering Inc (ASE) and will close some assembly and testing plants that are not cost-effective, sources reported.

A senior executive of ASE said the company will help carry out chip testing and packaging work for Intel's Southbridge chips, and estimates that Intel's deal will boost the company's operating revenue by 40% in the second quarter of 2009 from a quarter earlier.

Siliconware Precision Industries Co Ltd in Taiwan and American Amkor Technology Inc will also benefit from Intel's outsourcing plan.

After restructuring its productive sector this year, Intel is gradually outsourcing more chip testing and packaging work for some of its products.

According to an earlier report from China Knowledge, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) will produce Intel's low-cost Atom chips. The first time that Intel has outsourced its CPU fabrication to a foundry.

Meanwhile, Intel will strictly monitor the supply of its Atom processors to mainland China and will not accept orders for Atom processors from local knockoff netbook producers. These mainland knockoff makers will have to contact Intel's local agencies to procure Atom processors.