Athira Sethu
Kochi, 18 September
Intel has announced a major new partnership with Amazon Web Services (AWS), Amazon’s cloud computing division, to create custom artificial intelligence (AI) chips. This deal marks a significant step forward for Intel’s contract manufacturing business, known as its foundry, as it secures AWS as a key customer for chip production. The partnership is a major vote of confidence for Intel, which has been working to revitalize its business.
Intel’s Shares Surge on the News
Following the announcement, Intel’s stock rose and closed 2.68% up at $21.47 on Tuesday on Nasdaq. This surge came after Intel’s CEO, Pat Gelsinger, shared a memo with employees revealing that AWS had signed on as a multibillion-dollar customer. AWS will be paying Intel for both chip design services and manufacturing, solidifying Intel’s role as a major player in custom chip production. The memo also outlined Intel’s plans for cutting costs as part of its broader strategy to turn around its business.
AWS to Use Intel’s Most Advanced Technology
Amazon’s AWS already designs several of its own chips for use in data centers. With this new partnership, Intel will be responsible for packaging one version of these chips and producing a custom AI chip, known as an “artificial intelligence fabric chip,” for AWS. Intel will use its most advanced manufacturing process, called the 18A process, to make these chips. The 18A process is Intel’s cutting-edge technology available to outside customers, and it’s expected to boost the performance of the chips AWS uses for AI tasks.
Future Collaboration and Expanded Partnership
In addition to the current deal, Intel expects to work with AWS on future custom chip designs using even more advanced manufacturing technologies, such as the upcoming 18AP and 14A processes. These newer processes will be used in Intel’s facilities, including those in Ohio, where Intel is committed to growing its semiconductor production.
AWS also has plans to expand its data center operations in Ohio, with an additional $7.8 billion investment, adding to the $10.3 billion it has already invested in the state since 2015. Both companies are focused on boosting semiconductor manufacturing in the U.S. and advancing AI technology.
Intel’s Comeback Strategy
This partnership comes as Intel continues to implement strategies to revive its business after reporting poor earnings in the second quarter. In the memo, Gelsinger outlined steps Intel would take to improve its performance, including cutting costs and focusing on innovation in semiconductor technology. Intel Foundry, the company’s chip manufacturing division, is set to lead these efforts with its advanced chip-making capabilities.
Government Support for Intel
Intel also announced that it has received up to $3 billion in direct funding from the Biden-Harris Administration under the CHIPS and Science Act. This funding is part of the Secure Enclave program, which aims to enhance the U.S. government’s trusted manufacturing of advanced semiconductors. Intel is using this funding to further strengthen its manufacturing of high-tech chips.
Intel’s partnership with AWS signals a promising future for its foundry business as the company continues to make strides in chip manufacturing. Intel Foundry is on track to achieve rapid technological advancements, with the 18A process set to go into full production by 2025. The company is focusing its efforts on semiconductor research and development across its key facilities in Arizona, New Mexico, Ohio, and Oregon, as it works to regain its leadership position in the chip-making industry.
