While Intel’s virtual reality and augmented reality gambits stole the headlines at its Developer Forum yesterday, the company also made a second, arguably even more important announcement, in the form of a deal with rival chip maker ARM Holdings Ltd. to use its physical intellectual property.

Intel Custom Foundry will now begin making processors based on ARM’s designs in a deal that could give Intel a big boost in its mobile and Internet of Things (IoT) efforts.

The deal comes just months after Intel announced a major strategic reshuffle that will see it focus more on chips for data centers and the IoT, with less emphasis being given to its main PC chip business. Intel has been in the doldrums for a while due to declining PC sales, though numerous analysts have pointed out that one of Intel’s core strengths has always been its manufacturing abilities.

As a result, analysts believe the company has significant room for growth if it starts making chips for other companies. In particular, today’s partnership could mean that Intel ends up making processors for Apple’s iPhones and iPads.

In a blog post coinciding with today’s announcement, Intel said its foundry business will begin offering turnkey manufacturing for systems on chips, adding that its latest 10-nanometer processes will be a big boost to efficiency. Intel says it’s already making chips for companies such as LG Electronics Co. Ltd. and Netronome.

“Intel now has the capability and the IP to produce nearly any kind of silicon in their state of the art fabs,” said Patrick Moorhead, principal analyst at Moor Insights & Strategy. “This greatly increases Intel’s foundry opportunity which can only increase Intel fab utilization rates. Increase in fab utilization rates will be directly related to Intel’s success in driving mobile foundry volumes. This is in addition, of course, to their own silicon.”

The deal is also great news for ARM, which is currently on the verge of a takeover by Japanese telecommunications giant SoftBank Corp. The company said the deal means that all major foundries now offer its Artisan platform.

“Despite press stories, Intel and ARM have worked together for years to help enable the ecosystem, and this is just the latest milestone in that long-standing relationship,” ARM said in a statement.

Another bonus for Intel’s foundry business is it now has enough fuel to challenge rivals like GlobalFoundries Inc. and Samsung Electronics Co., Ltd., potentially as a supplier to Apple, which is understand to want to diversify its supply chain.

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