Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) said on Thursday that they have put on hold the collaboration on manufacturing of Intel's Atom microprocessors due to lack of market demands.

However, the companies will continue their partnership, which they announced in March last year, the Taiwan Economic News reported on Friday. The companies are expected to start collaborating in 2011.

Atom production was estimated to contribute 1-2% of TSMC's revenue this year.

The Atom processors are designed for mobile devices including mobile Internet devices (MIDs), smartphones, netbooks and nettops.

TSMC is already making north-bridge and south-bridge chipsets for Atom processors. Intel also contracted TSMC to make WiMAX chips for it two years ago.