Intel bets billions on advanced packaging as Google and Amazon eye alternatives to TSMC bottleneck

Intel Foundry Pursues Billion-Dollar Advanced Packaging Deals

Intel is actively negotiating with Google and Amazon to provide advanced chip packaging services for their custom AI processors, according to multiple sources cited in recent reports1

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. These discussions represent a pivotal moment for Intel Foundry, which is positioning advanced packaging as a critical differentiator in the AI boom. CFO Dave Zinsner revealed at the Morgan Stanley Technology, Media, and Telecom conference in March that the company is "close to closing some deals that are in the billions of dollars per year, in terms of revenue on packaging"1

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. This marks a dramatic upward revision from his earlier projections of hundreds of millions of dollars to "well north of $1 billion"2

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. While Google, Amazon, and Intel all declined to comment on specific customer relationships, the implications are clear: Intel sees advanced chip packaging services as a fast track to foundry operations revenue.

Advanced Packaging Emerges as Critical Bottleneck in AI Infrastructure

Advanced packaging involves combining multiple chiplets onto a single, custom chip—a process that has become essential for AI computing performance1

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. Right now, almost all advanced packaging happens in Asia, creating supply chain constraints that threaten to slow the AI boom3

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. TSMC dominates the market with its CoWoS technology, which is growing at an 80% compound annual growth rate, with Nvidia reserving a majority of the most advanced capacity available3

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. Georgetown University's John VerWey warns this bottleneck "can emerge very quickly if people are not making the CapEx investments proactively to account for the surge in fab output that's going to be coming in the next couple of years"3

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. This constraint creates an opening for Intel, which is technologically on par with TSMC but offers a diversified production network that reduces geopolitical risk4

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EMIB Technology Positions Intel Against TSMC's CoWoS Dominance

Intel's advanced packaging portfolio centers on EMIB, a 2.5D technology that embeds small silicon bridges in the package substrate to connect chiplets, and Foveros, its 3D die-stacking process2

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. The next-generation EMIB-T, which adds through-silicon vias to the bridge for improved power delivery and signal integrity, is set to roll out in production fabs this year2

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. EMIB-T supports packages up to 120x180mm and can accommodate more than 38 bridges and over 12 reticle-sized dies2

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. Sources suggest both Google's TPUs and Amazon's Trainium chips could likely see EMIB-T integration4

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. Naga Chandrasekaran, head of Intel Foundry, told WIRED that "even more so than the silicon itself, chip packaging is going to transform how this AI revolution comes to fruition over the next decade"2

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Massive Infrastructure Investment Supports Packaging Expansion

Intel is scaling capacity across three countries to meet surging demand for custom AI chips. The company's Fab 9 facility in Rio Rancho, New Mexico, received $500 million from the CHIPS Act and has been operational since January 2024 after sitting dormant since 20071

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. In Malaysia, the Penang advanced packaging complex is 99% complete and will begin first-phase assembly and testing operations later this year, according to Malaysian Prime Minister Anwar Ibrahim2

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. Intel has also outsourced EMIB production for the first time to Amkor's Songdo K5 facility in South Korea, with additional sites planned in Portugal and Arizona2

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. Dave Zinsner noted at the Morgan Stanley conference that customers are ready to commit and willing to "prepay" for capacity, showing confidence in Intel's offerings4

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High Stakes for Intel's Foundry Turnaround Strategy

The packaging business represents a critical lifeline for Intel Foundry, which posted $4.5 billion in revenue for Q4 2025 with a $2.5 billion operating loss2

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. External foundry revenue for the full year totaled just $307 million, mostly from U.S. government contracts and residual Altera work2

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. The Foundry division lost $10.3 billion on $17.8 billion in revenue for all of 2025, driven largely by the cost of ramping Intel 18A2

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. Zinsner believes Intel Foundry's packaging business can achieve the same 40% gross margins that it claims on the rest of its products1

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. Securing deals with hyperscalers like Google and Amazon also brings significant PR benefits, demonstrating that Intel can compete for external customers beyond its internal product divisions4

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. The official timeline for customer commitments is H2 2026, with details potentially surfacing at the next earnings call expected on April 234

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