Intel Secures Custom Chip Deal with Amazon, Boosting Foundry Business Prospects

Intel foundry business to make custom chip for Amazon, chipmaker's shares jump

Intel's foundry, or contract manufacturing business, has signed up Amazon's cloud services unit as a customer for making custom artificial intelligence chips, the companies said on Monday, a deal that gives the chip maker a vote of confidence. Intel's shares rose roughly 8% in extended trading after CEO Pat Gelsinger released a memo to employees announcing Intel had secured the Amazon unit as be a multibillion-dollar customer, paying Santa Clara, California-based Intel for design services and manufacturing. The memo also outlined Intel's planned cost cuts. Amazon's AWS cloud computing division already designs several chips for use in its data centers and has hired Intel to package at least one version. Intel will produce an "artificial intelligence fabric chip" for AWS and use the chip maker's 18A process, the most advanced version available for outside customers, the companies said. Intel said it expects to make additional designs from Amazon on the company's forthcoming 18AP and 14A manufacturing processes. The memo also outlined a number of steps Intel would take to revive itself. Last month, it reported disastrous second quarter earnings. "The board and I agreed that we have a lot of work ahead to drive greater efficiency, improve our profitability and enhance our market competitiveness," Gelsinger wrote in the memo. Among steps the board has decided to take, Intel is selling a stake in its programmable chip business Altera. It also said it would pause construction at its chip factory project in Germany for two years, a move Reuters had previously reported. The company plans to pause its project in Poland as well. Intel said there are no changes to its plans to expand manufacturing in the U.S. Intel plans to keep its manufacturing business, or foundry, inside the company, confirming earlier Reuters reporting. The foundry business is crucial to Gelsinger's turnaround plan for the company, which he outlined in 2021. Until Amazon, Intel has struggled to find marquee customers that it could discuss publicly. But in the memo, Gelsinger said the foundry business would have greater independence, for instance being able to take outside capital. Intel plans to establish it as an independent subsidiary, with an operating board that will oversee the foundry operation. The foundry unit separated its financial performance from the design business earlier this year. The company is also taking several steps to prioritize the core technology behind its central processing units (CPUs), and is reorganizing several divisions, including its automotive and "edge" businesses. On Monday Intel also said it was awarded up to $3 billion in direct funding from the U.S. CHIPS and Science Act, as part of the Secure Enclave program. The company said it plans to send notices in the middle of October to the roughly 15,000 employees it said in August it would lay off.

Intel's Amazon chip deal lifts investor confidence in money-losing foundry unit

Sept 17 (Reuters) - Intel shares jumped 7% before the bell on Tuesday, as a chip-making deal with Amazon's cloud business provided a major stamp of approval for its struggling contract manufacturing business. The chipmaker (INTC.O), opens new tab will build custom AI chips for Amazon Web Services (AWS) as part of the multibillion-dollar deal. The move expands a years-long tie-up between the companies under which Intel designs several chips used in Amazon's datacenters. Advertisement · Scroll to continue "The deal provides Intel with some credibility as it looks to gain traction with new external customers. In addition, it will help Intel sell itself as a supplier of custom AI silicon chips" said Angelo Zino, senior equity analyst at CFRA Research. Intel's stock has plunged nearly 60% this year and has lagged chip firms, including Nvidia (NVDA.O), opens new tab and TSMC , as it missed out on an AI-driven boom in chip demand. Advertisement · Scroll to continue The company has been trying to regain the manufacturing edge it lost to TSMC by building out its foundry unit, which has been the centerpiece of CEO Pat Gelsinger's turnaround strategy. AWS (AMZN.O), opens new tab is among the first major customers Intel has announced a definitive deal with. It had said in February Microsoft (MSFT.O), opens new tab would use its services to manufacture a custom computing chip. But "meaningful" revenue from the capital-intensive foundry unit is not expected until 2027, even as expensive investments sap cash flow and draw investor ire. To ease the pressure, Intel said it would pause chip factory projects in Poland and Germany by about two years, raising doubts about the nearly 10 billion euros ($11.14 billion) in subsidies from Germany for its two plants in the country. "The move ... should help to boost cash flow, even if the focus on US-based fabs is unlikely to go down well in the EU. It will no doubt gain plaudits in Washington though and help Intel preserve important relationships," Russ Mould, investment director at AJ Bell, said. ($1 = 0.8978 euros) Reporting by Deborah Sophia and Arsheeya Bajwa in Bengaluru; Editing by Arun Koyyur Our Standards: The Thomson Reuters Trust Principles., opens new tab

Intel rises as Amazon deal boosts struggling foundry unit's prospects

Intel will build custom AI chips for Amazon Web Services (AWS) as part of the multibillion-dollar deal, expanding a years-long partnership between the companies. "The deal provides Intel with some credibility as it looks to gain traction with new external customers. In addition, it will help Intel sell itself as a supplier of custom AI silicon chips," said Angelo Zino, senior equity analyst at CFRA Research. Intel is on track to add more than $3 billion to its market value, if gains hold. It fell below $100 billion for the first time in three decades this year. The company missing out on AI-linked demand is partly to blame for the stock lagging far behind competitors like Nvidia and TSMC, the world's largest contract chip manufacturer. AWS is among the first major customers Intel has announced a definitive deal with. It had said in February Microsoft would use its services to manufacture a custom computing chip. While a significant step forward, the deal alone is not enough to drag Intel out of its slump, analysts said. Intel would need to manufacture chips for the likes of Nvidia and AMD, both TSMC's customers, in order to fully establish itself, said Hans Mosesmann, an analyst at Rosenblatt Securities. Intel will also pause fab projects in Poland and Germany for about two years, raising doubts about the nearly 10 billion euros ($11.14 billion) in subsidies from Germany for its two plants in the country. "The move ... should help to boost cash flow, even if the focus on U.S.-based fabs is unlikely to go down well in the EU. It will no doubt gain plaudits in Washington though and help Intel preserve important relationships," said Russ Mould, investment director at AJ Bell. (Reporting by Deborah Sophia and Arsheeya Bajwa in Bengaluru; Editing by Arun Koyyur and Devika Syamnath)

Intel's Amazon chip deal lifts investor confidence in money-losing foundry unit

(Reuters) - Intel shares jumped 7% before the bell on Tuesday, as a chip-making deal with Amazon's cloud business provided a major stamp of approval for its struggling contract manufacturing business. The chipmaker will build custom AI chips for Amazon Web Services (AWS) as part of the multibillion-dollar deal. The move expands a years-long tie-up between the companies under which Intel designs several chips used in Amazon's datacenters. "The deal provides Intel with some credibility as it looks to gain traction with new external customers. In addition, it will help Intel sell itself as a supplier of custom AI silicon chips" said Angelo Zino, senior equity analyst at CFRA Research. Intel's stock has plunged nearly 60% this year and has lagged chip firms, including Nvidia and TSMC, as it missed out on an AI-driven boom in chip demand. The company has been trying to regain the manufacturing edge it lost to TSMC by building out its foundry unit, which has been the centerpiece of CEO Pat Gelsinger's turnaround strategy. AWS is among the first major customers Intel has announced a definitive deal with. It had said in February Microsoft would use its services to manufacture a custom computing chip. But "meaningful" revenue from the capital-intensive foundry unit is not expected until 2027, even as expensive investments sap cash flow and draw investor ire. To ease the pressure, Intel said it would pause chip factory projects in Poland and Germany by about two years, raising doubts about the nearly 10 billion euros ($11.14 billion) in subsidies from Germany for its two plants in the country. "The move ... should help to boost cash flow, even if the focus on US-based fabs is unlikely to go down well in the EU. It will no doubt gain plaudits in Washington though and help Intel preserve important relationships," Russ Mould, investment director at AJ Bell, said. (Reporting by Deborah Sophia and Arsheeya Bajwa in Bengaluru; Editing by Arun Koyyur)

Intel foundry business to make custom chip for Amazon, chipmaker's shares jump

Amazon's cloud computing division already designs several chips for use in its data centers and has hired Intel to package at least one version. Intel will produce an "artificial intelligence fabric chip" for AWS and use the chip maker's 18A process node, the most advanced version available for outside customers, the companies said. The memo also outlined a number of steps Intel would take to revive itself after it reported disastrous second quarter earnings. Among steps Intel's board has decided to take is selling a stake in its programmable chip business Altera. It also said it would pause construction at its project in Germany for two years, a move Reuters had previously reported. Intel plans to keep its manufacturing business, or foundry, inside the company, confirming earlier Reuters reporting. The foundry business is crucial to Gelsinger's turnaround plan for the company, which he outlined in 2021. Until Amazon, Intel has struggled to find marquee customers that it could discuss publicly. In the memo, Gelsinger said the foundry business would have greater independence, for instance being able to take outside capital. Intel plans to establish it as an independent subsidiary. The foundry unit separated its financial performance from the design business earlier this year. The company is also taking several steps to prioritize the core technology behind its central processing units (CPUs), and is reorganizing several divisions, including its automotive and "edge" businesses. On Monday Intel also said it was awarded up to $3 billion in direct funding from the CHIPS and Science Act, as part of the Secure Enclave program. The company said it plans to send notices in the middle of October to the roughly 15,000 employees it said in August it would lay off. (Reporting by Max A. Cherney in San Francisco and Juby Babu in Mexico City; Editing by Krishna Chandra Eluri and David Gregorio)

Intel Signs AI Chip Deal With Amazon, To Split Foundry Business As Separate Subsidiary

Intel's Foundry business signed a billion-dollar deal with Amazon to make custom chips for the e-commerce giant and revealed plans to split Intel Foundry as an independent subsidiary within the firm. The deal will expand Intel's strategic collaboration with Amazon Web Services (AWS). Under the deal, Intel Foundry -- the contract manufacturing arm of Intel -- will produce an artificial intelligence (AI) fabric chip for AWS on Intel 18A process. Intel will also produce a custom Xeon 6 chip on Intel 3 that builds on existing partnership, under which Intel produces Xeon Scalable processors for AWS. "More broadly, we expect to have deep engagement with AWS on additional designs spanning Intel 18A, Intel 18AP and Intel 14A," the company said in a statement. CNN reported that the business boost came after Intel revealed that under the CHIPS and Science Act, it will receive funding at around $3 billion, to manufacture chips for the military. CEO Pat Gelsinger was the one who furnished the details of the transaction to his employees in a memo. He also outlined the steps that would be taken by the company to further improve its competitiveness. "The board and I agreed that we have a lot of work ahead to drive greater efficiency, improve our profitability and enhance our market competitiveness," said Gelsinger. The company also plans to establish Intel Foundry as an independent subsidiary inside of Intel. This governance structure will complete the process the company initiated earlier this year. While Amazon's AWS cloud computing division designs chips that it uses in its data centers, it still hired Intel to manufacture an "artificial intelligence fabric chip," and it will utilize the 18A process of the chipmaker, touted as the most advanced version for external customers, Reuters reported. Intel has been struggling to keep up with mobile computing. It used to be regarded as the most dominant chipmaker, having cemented its presence on Macs and PCs. However, its market value was already surpassed by Texas Instruments and Qualcomm, as well as Nvidia, which managed to make a name in the AI chipmaking industry. With the recent partnership of Intel with AWS, it may now be trying to catch-up with its contemporaries in the field. The company's top priority is to maximize the value of x86 franchise across client, edge and data center markets, including with a broader range of custom chiplets and other customized offerings The company continues to build additional manufacturing plants within the U.S., particularly in Arizona, New Mexico, Ohio and Oregon. It recently increased capacity in Europe through fab in Ireland and plans to complete the construction of new advanced packaging factory in Malaysia. However, production at two of its plants abroad, in Poland and Germany, was suspended for two years. Gelsinger also gave an update on its previously disclosed goal of cutting costs of about $10 billion by 2025. The company changed its business model and tried to be like its rival TSMC of Taiwan. In the memo, Gelsinger also noted that the company was already more than halfway of cutting 15,000 employees by the end of the year pursuant to its goal to cut costs by 2025.

Intel shares jump on deal to make chips for Amazon

The chipmaker said Monday it had won a deal to make custom AI processors for the search giant's could computing division. That's a big vote of confidence in Intel's troubled contract manufacturing unit, or foundry. Shares in the firm surged 8% in after-hours trade as a result. Intel has been battered by problems of late, revealing disastrous second-quarter earnings last month. The foundry has been among the big worries, after the firm warned it wouldn't turn a profit until 2027. Before this week it had struggled to land any marquee customers. That had led to speculation it could be sold off. Now Intel boss Pat Gelsinger has confirmed the foundry will stay within the company, and be central to a turnaround plan. However, it will be established as an independent subsidiary, with its own board. Meanwhile, Intel is taking other steps to raise money and cut costs. That includes selling a stake in its programmable chip unit Altera, and pausing work on new factories in Germany and Poland. The company also plans to lay off some 15,000 workers. On Monday, Intel also said it had won a $3 billion contract from Washington to develop a so-called "Secure Enclave" for microelectronics. That's meant to guarantee a U.S.-made supply of critical parts for weapon systems and other national security products. The move is part of Biden administration efforts to bring home, or "re-shore", chip manufacturing and tech research.

Intel's Amazon chip deal lifts investor confidence in money-losing unit

Intel's Amazon chip deal lifts investor confidence in money-losing foundry unit Sept 17 (Reuters) - Intel shares jumped 7 per cent before the bell on Tuesday, as a chip-making deal with Amazon's cloud business provided a major stamp of approval for its struggling contract manufacturing business. The chipmaker will build custom AI chips for Amazon Web Services (AWS) as part of the multibillion-dollar deal. The move expands a years-long tie-up between the companies under which Intel designs several chips used in Amazon's datacenters. Click here to connect with us on WhatsApp "The deal provides Intel with some credibility as it looks to gain traction with new external customers. In addition, it will help Intel sell itself as a supplier of custom AI silicon chips" said Angelo Zino, senior equity analyst at CFRA Research. Intel's stock has plunged nearly 60 per cent this year and has lagged chip firms, including Nvidia and TSMC, as it missed out on an AI-driven boom in chip demand. The company has been trying to regain the manufacturing edge it lost to TSMC by building out its foundry unit, which has been the centerpiece of CEO Pat Gelsinger's turnaround strategy. AWS is among the first major customers Intel has announced a definitive deal with. It had said in February Microsoft would use its services to manufacture a custom computing chip. More From This Section Tech wrap Sep 17: iOS 18, Samsung Galaxy Tab S10 series pre-reserve, more Facebook owner Meta bans Russia state media over 'foreign interference' Samsung begins pre-reserve for upcoming Galaxy Tab S10 series in India watchOS 11 brings sleep apnea detection to Apple Watch Series 9, Ultra 2 Google could enable notification syncing across Android devices: Report But "meaningful" revenue from the capital-intensive foundry unit is not expected until 2027, even as expensive investments sap cash flow and draw investor ire. To ease the pressure, Intel said it would pause chip factory projects in Poland and Germany by about two years, raising doubts about the nearly 10 billion euros ($11.14 billion) in subsidies from Germany for its two plants in the country. "The move ... should help to boost cash flow, even if the focus on US-based fabs is unlikely to go down well in the EU. It will no doubt gain plaudits in Washington though and help Intel preserve important relationships," Russ Mould, investment director at AJ Bell, said. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.) Also Read Intel foundry business to make custom chip for Amazon; shares jump 8% Intel receives $3 bn from Pentagon for mfg chips for military; shares gain Qualcomm explored acquiring portions of Intel's chip design business Tech wrap Sep 04: Intel AI chips, Pixel 9 Pro Fold sale, Music Search, more Intel launches Lunar Lake chips to rival Qualcomm in AI PC segment: Details

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Intel shares jump on deal to make chips for Amazon Intel's foundry, or contract manufacturing business, has signed up Amazon's cloud services unit as a customer for making custom artificial intelligence chips, the companies said on Monday, a deal that gives the chip maker a vote of confidence. Julian Satterthwaite reports.

Intel foundry business to make custom chip for Amazon; shares jump 8%

Intel's foundry, or contract manufacturing business, has signed up Amazon's cloud services unit as a customer for making custom artificial intelligence chips, the companies said on Monday, a deal that gives the chip maker a vote of confidence. Intel's shares rose roughly 8 per cent in extended trading after CEO Pat Gelsinger released a memo to employees announcing Intel had secured the Amazon unit as be a multibillion-dollar customer, paying Santa Clara, California-based Intel for design services and manufacturing. The memo also outlined Intel's planned cost cuts. Click here to connect with us on WhatsApp Amazon's AWS cloud computing division already designs several chips for use in its data centers and has hired Intel to package at least one version. Intel will produce an "artificial intelligence fabric chip" for AWS and use the chip maker's 18A process, the most advanced version available for outside customers, the companies said. Intel said it expects to make additional designs from Amazon on the company's forthcoming 18AP and 14A manufacturing processes. The memo also outlined a number of steps Intel would take to revive itself. Last month, it reported disastrous second quarter earnings. "The board and I agreed that we have a lot of work ahead to drive greater efficiency, improve our profitability and enhance our market competitiveness," Gelsinger wrote in the memo. More From This Section Social media age limits restricting children are too little too late Japanese firm Daiichi wants to go alone in search of targeted cancer drugs Israel's Minister of Defence Gallant updates senior advisor to Biden on war US expresses frustration with Israel's military about strikes in Gaza US justice dept says Google saw ad startup AdMeld as threat and bought it Among steps the board has decided to take, Intel is selling a stake in its programmable chip business Altera. It also said it would pause construction at its chip factory project in Germany for two years, a move Reuters had previously reported. The company plans to pause its project in Poland as well. Intel said there are no changes to its plans to expand manufacturing in the US. Intel plans to keep its manufacturing business, or foundry, inside the company, confirming earlier Reuters reporting. The foundry business is crucial to Gelsinger's turnaround plan for the company, which he outlined in 2021. Until Amazon, Intel has struggled to find marquee customers that it could discuss publicly. But in the memo, Gelsinger said the foundry business would have greater independence, for instance being able to take outside capital. Intel plans to establish it as an independent subsidiary, with an operating board that will oversee the foundry operation. The foundry unit separated its financial performance from the design business earlier this year. The company is also taking several steps to prioritize the core technology behind its central processing units (CPUs), and is reorganising several divisions, including its automotive and "edge" businesses. On Monday Intel also said it was awarded up to $3 billion in direct funding from the US CHIPS and Science Act, as part of the Secure Enclave programme. The company said it plans to send notices in the middle of October to the roughly 15,000 employees it said in August it would lay off. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.) Also Read Intel receives $3 bn from Pentagon for mfg chips for military; shares gain Qualcomm explored acquiring portions of Intel's chip design business Tech wrap Sep 04: Intel AI chips, Pixel 9 Pro Fold sale, Music Search, more Intel launches Lunar Lake chips to rival Qualcomm in AI PC segment: Details Intel mulls options including split between design, foundary to stem losses

Intel Signs "Multi-Billion-Dollar Framework" To Make Amazon AI Chips With Latest Technology

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Intel's shares jumped by 8% in after market trading to provide the stock with some much needed respite after enterprise computing behemoth Amazon AWS announced that it is teaming up with the firm to develop chips on the 18A process node. The deal should be part of Intel's fledgling Intel Foundry Services business, which has seen CEO Pat Gelsinger go all in as part of his bid to rescue the beleaguered chip manufacturing company. Amazon's announcement shared that the deal has received the blessing of officials in Ohio, where the firm plans to invest $7.8 billion in data center operations. The deal will also see the pair 'explore' future chip manufacturing technologies such as Intel's 18AP and the 14A process. Intel and Amazon's press release did not share the financial specifics of the new deal. Instead, they outlined a "co-investment" that is part of a "multi-year, multi-billion-dollar framework covering product and wafers from Intel" which saw the chip manufacturer tout its previous partnerships with Amazon to bring the latter's cloud computing instances on the Intel platform. Amazon's Amazon Web Services (AWS), which led today's announcement, is the high margin, recurring revenue division of the business that originally started as an eCommerce firm. It, like other technology giants, develops custom chips to power up in house software, but these have mostly been based on the Arm architecture. Under the new deal, Intel will first use its Intel 3 manufacturing process to build a custom Xeon 6 chip for Amazon workloads. Previous Xeon Scalable processors have seen Amazon run the EC2 instances, which Amazon has claimed has allowed up to 20% higher performance than predecessor instances. In cloud computing, an Instance is a virtualization of a physical computer, and faster performance enables users to improve costs and computing. Following the custom Xeon chip, Intel will also produce an "AI fabric chip" for Amazon's AWS on the 18A manufacturing process. 18A is Intel's all out effort to retake the chip manufacturing crown, and the firm is also working with Broadcom to use the technology. The process is slated to enter production next year, at par with the Taiwan Semiconductor Manufacturing Company's (TSMC) 2 nanometer node. It is likely that the AI fabric chip will be based on ARM's chip designs and will be a successor to Amazon's current custom processors, but this remains speculation unless Intel and Amazon share additional details. Intel CEO Patrick Gelsinger has repeatedly stressed that his firm is the only one with a diverse semiconductor portfolio capable of targeting all AI requirements. During Intel's first quarter of 2024 earnings call, Gelsinger shared that his firm has a "clear line-of-sight to becoming the largest system foundry for the AI era and the second-largest overall by 2030," and the Amazon deal might help achieve the objective. Amazon, along with Google and Meta, is developing its in house chips for AI workloads. Google's tensor processors are already used by Apple to train its AI software, and Meta shared details of its training and inference accelerator for AI workloads in April. These developments come as NVIDIA remains the undisputed leader of AI processors, and firms rush to lay their hands on its latest chips that are in short supply.

Intel stock surges on plans to make AI chips for Amazon and to turn foundry into subsidiary

Shares of Intel are surging before the opening bell after the chipmaker said its foundry business would make some custom artificial intelligence chips for Amazon Web Services as it attempts to reinvigorate its business Shares of Intel are surging before the market opens Tuesday after the chipmaker said its foundry business would make some custom artificial intelligence chips for Amazon Web Services as it attempts to reinvigorate its business. CEO Pat Gelsinger said in a message to employees late Monday that Intel will create an AI fabric chip for Amazon's cloud services division at its foundry business, a struggling division that he said would become a subsidiary of Intel. "A subsidiary structure will unlock important benefits," Gelsinger said. "It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation." Harlan Sur of JP Morgan believes that making the foundry business a subsidiary is a logical next step. "We believe this move is a natural progression to drive better transparency and decision making/efficiencies and therefore should not be viewed as a surprise," the analyst wrote in a note to clients. Sur anticipates the shift could possibly lead to a spin out of the business over the next few years. A board that includes independent directors will be created for the planned subsidiary. Gelsinger also provided an update on Intel's cost-cutting efforts. The executive said that the chip maker, through voluntary early retirement and separation offerings, is more than halfway to its workforce reduction target of approximately 15,000 by the end of the year. He added that "difficult decisions" will still need to be made, with impacted employees being notified in the middle of October. Intel also plans to reduce or exit about two-thirds of its real estate worldwide by year's end. Shares of Intel Corp. jumped nearly 7% in premarket trading.

Intel and AWS to expand chip making collaboration, Intel shares surge

Intel CEO Pat Gelsinger released a memo to employees announcing that the Amazon unit would be a multibillion-dollar customer, paying Intel for design services and manufacturing. The memo also outlined a number of steps Intel would take to revive itself after a disastrous second quarter earnings. Among the steps Intel's board has decided to take is selling a stake in its programmable chip business Altera. It also said it would pause construction at its project in Germany for two years, a move Reuters had previously reported. The company plans to keep its manufacturing business, or foundry, inside the company, confirming earlier Reuters reporting. In the memo, Gelsinger said the foundry business would have greater independence, for instance being able to take outside capital. Intel plans to establish it as an independent subsidiary. The foundry unit separated its financial performance from the design business earlier this year. Intel will produce an "artificial intelligence fabric chip" for AWS and use the company's 18A process node, the most advanced version available for outside customers. (Reporting by Max A. Cherney in San Francisco and Juby Babu in Mexico City; Editing by Krishna Chandra Eluri and David Gregorio)

Intel to build custom AI chip for Amazon's AWS

Intel Corp. Chief Executive Officer Pat Gelsinger has landed Amazon.com Inc.'s AWS as a customer for the company's manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS will coinvest in a custom semiconductor for artificial intelligence computing - what's known as a fabric chip - in a "multiyear, multibillion-dollar framework," according to a statement Monday. The work will rely on Intel's 18A process, an advanced chipmaking technology. The shares jumped more than 8% in late trading after the announcement. They had been down 58% this year, closing at $20.91 on Monday. "Today's announcement is big," Gelsinger said in an interview. "This is a very discerning customer who has very sophisticated design capabilities." The news was part of a flurry of announcements that followed a pivotal board meeting last week. Intel also is postponing new factories in Germany and Poland, but remains committed to its US expansion in Arizona, New Mexico, Oregon and Ohio. Gelsinger, who embarked on a bold comeback effort for Intel in 2021, has had to scale back some of his ambitions in the name of efficiency. With sales shrinking and losses piling up, the company announced plans last month to slash 15,000 workers, find $10 billion in cost savings and suspend Intel's dividend. Now he's going further to rein in expansion plans, especially overseas. The Poland and Germany construction projects will be paused for about two years depending on market demand. Another one in Malaysia will be completed but only put into operation when conditions support it, Intel said. At last week's three-day board meeting, executives presented options on how to conserve cash while keeping Gelsinger's turnaround plan on track. The CEO's effort hinges on transforming Intel into a so-called foundry, a chipmaker that manufacturers products for outside customers. The Santa Clara, California-based company has been slow to line up customers for the project -- and a high-profile client such as Amazon represents a notable win. Intel also is looking to speed up efforts to execute the $10 billion in cost savings and focus its products better on AI computing, an area where rival Nvidia Corp. has excelled. It's also looking to pare its real estate globally by about two-thirds by the end of the year. And the company reiterated plans to sell part of its stake in Altera Corp. to private equity investors. The business, which Intel bought in 2015, was separated from its operations last year with the goal of taking it public. Amazon Web Services is the largest provider of cloud computing, and it could help build confidence that Intel can compete with the likes of foundry leader Taiwan Semiconductor Manufacturing Co. AWS has used Intel processors over the years, but has been shifting more toward in-house designs -- the very products that Intel may now help manufacture. Microsoft Corp., another major cloud-computing provider, announced plans in February to use Intel for some of its in-house chips as well. Another change: Intel's foundry operations, referred to as IFS, will be further separated from the rest of the company and become a wholly owned subsidiary. That move is aimed in part at convincing prospective customers -- some of whom compete with Intel -- that they are dealing with an independent supplier. Bloomberg reported earlier on a potential foundry separation. "We still have things to learn about becoming a foundry," Gelsinger said in the interview. "I need lots of customers." In another win, Intel said earlier Monday that it's eligible to receive as much as $3 billion in US government funding to manufacture chips for the military. The effort, called the Secure Enclave, aims to establish a steady supply of cutting-edge chips for defense and intelligence purposes. That news helped send the shares up 6.4% in regular trading Monday. The Secure Enclave award is separate from a possible $8.5 billion Chips and Science Act grant that Intel is set to receive to support factories across four US states. The projects include a facility in New Albany, Ohio, that Intel has said could become the world's largest chipmaking operation. Intel still has a long way to go to win back Wall Street's full confidence. After years of losing ground to rivals and seeing its technological edge slip, the Silicon Valley pioneer is valued at less than $90 billion. It no longer ranks as one of the top 10 chip companies on that basis. Nvidia, meanwhile, now has a market capitalization of about $2.9 trillion. Intel shocked investors with a bleak financial report last month, triggering the biggest single-day stock decline in decades. Analysts described the announcement as Intel's worst-ever earnings report. Gelsinger, in a letter to employees, acknowledged that the chipmaker's performance has drawn negative scrutiny -- and spurred speculation over what might happen to the company. The only way to "quiet our critics" will be to deliver results and execute better, he said. Today's announcements are a step toward that, he said. "Is it good enough? No. Is it substantial? Yes," he said in the interview. "I've reupped my commitment. We're going to finish a seminal assignment."

Intel stock surges 14% after deal with AWS to produce AI chips

Intel's long and hard fall from grace is no secret. After a brutal year for both the company and its stock, however, shares of one of Silicon Valley's original giants have surged 14% after the beleaguered chipmaker announced a deal with Amazon to produce advanced AI chips. Intel has a long-running partnership with Amazon Web Services, the biggest cloud service provider in the world. Now, the two companies will co-invest in a custom semiconductor known as a "fabric chip" that will be built in a new factory under construction outside Columbus, Ohio. Intel also announced its struggling foundry business, which has fallen well behind the likes of TSMC, will become an independent subsidiary with the ability to raise outside capital. Earlier in the day, the Biden administration had officially revealed it would award Intel up to $3 billion in CHIPS Act funding as part of an effort called the Secure Enclave, which aims to ensure a steady supply of cutting-edge chips for defense and intelligence purposes. That's in addition to a $8.5 billion grant awarded to the company in February for several major construction projects, including the plant in Ohio. After a big Monday of news, Intel's long-suffering stock surged 8% in extended trading before rising another 6% as of midday Tuesday. The stock is still down over 50% year-to-date as investors await further signs of a recovery they're hoping for under CEO Pat Gelsinger. Once the biggest chipmaker in the world, Intel's market cap now sits below $100 billion, outside the industry's top 10 as the likes of Nvidia, Broadcom, and even Texas Instruments have surged far ahead. The company's recent performance also stands in contrast to another legacy tech name in Oracle, which has revitalized itself and seen its shares rise over 60% in 2024. Monday appears to be a step in the right direction, but Bank of America managing director and senior analyst Vivek Arya said the board's updates still left more questions than answers. While the AWS win sounded impressive, he wrote in a note published Tuesday morning, Intel has already supplied the cloud giant with CPUs, or computer processing units, for a long time. That market, specifically traditional PC chips, has historically been Intel's bread and butter business. It's faltered, however, under competition from Advanced Micro Devices, or AMD, whose cheaper and more efficient ARM-CPUs have caused Intel to lose market share. When it comes to advanced AI chips, meanwhile, Intel has been nowhere near Nvidia GPUs, or graphic processing units, which are all but essential for companies training GenAI models. Simply put, "they're in trouble," Baird managing director and tech strategist Ted Mortonson said of Intel last week. On Monday, the company said it was more than halfway to its target of slashing 15,000 workers by the end of the year. It's clear Monday's news, however, gave investors some solace.

Intel shares soar nearly 8% after multibillion-dollar chip deal with Amazon | Stock Market News

Shares of Intel Corp. soared as much as 8 per cent on Tuesday after a chip-making deal with Amazon's cloud business was announced. The deal provides some respite to Intel's investors as the chipmaker's shares had fallen nearly 60 per cent this year. As per the multibillion-dollar deal, Intel will build custom artificial intelligence (AI) chips for Amazon Web Services (AWS), expanding a years-long partnership between the two companies. The work will rely on Intel's 18A process, an advanced chipmaking technology. "Today's announcement is big," Intel Chief Executive Officer Pat Gelsinger said in an interview. "This is a very discerning customer who has very sophisticated design capabilities." AWS is among the first major customers Intel has announced a definitive deal with. In February, Intel had said Microsoft would use its services to manufacture a custom computing chip. The US chipmaker is on track to add more than $3 billion to its market value, if gains hold. It fell below $100 billion for the first time in three decades this year. On Monday, Intel also announced that it is eligible to receive as much as $3 billion in US government funding to manufacture chips for the military. The effort, called the Secure Enclave, aims to establish a steady supply of cutting-edge chips for defense and intelligence purposes. Intel also said that it will halt fab projects in Poland and Germany for about two years, raising doubts about the nearly 10 billion euros ($11.14 billion) in subsidies from Germany for its two plants in the country. The chipmaker is also looking to speed up efforts to execute the $10 billion in cost savings and focus its products better on AI computing.

Intel Stock Surges on Plans to Make AI Chips for Amazon and to Turn Foundry Into Subsidiary

Shares of Intel are surging before the market opens Tuesday after the chipmaker said its foundry business would make some custom artificial intelligence chips for Amazon Web Services as it attempts to reinvigorate its business. CEO Pat Gelsinger said in a message to employees late Monday that Intel will create an AI fabric chip for Amazon's cloud services division at its foundry business, a struggling division that he said would become a subsidiary of Intel. "A subsidiary structure will unlock important benefits," Gelsinger said. "It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation." Harlan Sur of JP Morgan believes that making the foundry business a subsidiary is a logical next step. "We believe this move is a natural progression to drive better transparency and decision making/efficiencies and therefore should not be viewed as a surprise," the analyst wrote in a note to clients. Sur anticipates the shift could possibly lead to a spin out of the business over the next few years. A board that includes independent directors will be created for the planned subsidiary. Gelsinger also provided an update on Intel's cost-cutting efforts. The executive said that the chip maker, through voluntary early retirement and separation offerings, is more than halfway to its workforce reduction target of approximately 15,000 by the end of the year. He added that "difficult decisions" will still need to be made, with impacted employees being notified in the middle of October. Intel also plans to reduce or exit about two-thirds of its real estate worldwide by year's end. Shares of Intel Corp. jumped nearly 7% in premarket trading. Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Intel stock surges on plans to make AI chips for Amazon and to turn foundry into subsidiary

Shares of Intel are surging before the market opens Tuesday after the chipmaker said its foundry business would make some custom artificial intelligence chips for Amazon Web Services as it attempts to reinvigorate its business. CEO Pat Gelsinger said in a message to employees late Monday that Intel will create an AI fabric chip for Amazon's cloud services division at its foundry business, a struggling division that he said would become a subsidiary of Intel. "A subsidiary structure will unlock important benefits," Gelsinger said. "It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation." Harlan Sur of JP Morgan believes that making the foundry business a subsidiary is a logical next step. "We believe this move is a natural progression to drive better transparency and decision making/efficiencies and therefore should not be viewed as a surprise," the analyst wrote in a note to clients. Sur anticipates the shift could possibly lead to a spin out of the business over the next few years. A board that includes independent directors will be created for the planned subsidiary. Gelsinger also provided an update on Intel's cost-cutting efforts. The executive said that the chip maker, through voluntary early retirement and separation offerings, is more than halfway to its workforce reduction target of approximately 15,000 by the end of the year. He added that "difficult decisions" will still need to be made, with impacted employees being notified in the middle of October. Intel also plans to reduce or exit about two-thirds of its real estate worldwide by year's end. Shares of Intel Corp. jumped nearly 7% in premarket trading.

Intel stock surges on plans to make AI chips for Amazon and to turn foundry into subsidiary

Shares of Intel are surging before the market opens Tuesday after the chipmaker said its foundry business would make some custom artificial intelligence chips for Amazon Web Services as it attempts to reinvigorate its business. CEO Pat Gelsinger said in a message to employees late Monday that Intel will create an AI fabric chip for Amazon's cloud services division at its foundry business, a struggling division that he said would become a subsidiary of Intel. "A subsidiary structure will unlock important benefits," Gelsinger said. "It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation." Harlan Sur of JP Morgan believes that making the foundry business a subsidiary is a logical next step. "We believe this move is a natural progression to drive better transparency and decision making/efficiencies and therefore should not be viewed as a surprise," the analyst wrote in a note to clients. Sur anticipates the shift could possibly lead to a spin out of the business over the next few years. A board that includes independent directors will be created for the planned subsidiary. Gelsinger also provided an update on Intel's cost-cutting efforts. The executive said that the chip maker, through voluntary early retirement and separation offerings, is more than halfway to its workforce reduction target of approximately 15,000 by the end of the year. He added that "difficult decisions" will still need to be made, with impacted employees being notified in the middle of October. Intel also plans to reduce or exit about two-thirds of its real estate worldwide by year's end. Shares of Intel Corp. jumped nearly 7% in premarket trading.

Intel soars on plan to establish Intel Foundry as an independent unit, AWS pact By Investing.com

Intel Corporation (NASDAQ:INTC) announced a strategic move to set up its Intel Foundry Services as an independent subsidiary within the company. Shares surged 8.6% in afterhours trade. The company said the decision is aimed at completing a process started earlier this year, involving the separation of profit and loss, as well as financial reporting for the foundry business and Intel Products. The creation of this subsidiary is expected to offer clear benefits by providing external foundry customers and suppliers with greater separation from Intel's core operations. It also allows for potential independent funding sources and the optimization of capital structures to spur growth and shareholder value. Pat Gelsinger, CEO of Intel, assured employees that the leadership team of Intel Foundry Services would remain unchanged and continue to report directly to him. An operating board, including independent directors, will be established to govern the subsidiary. In a related development, Intel and Amazon (NASDAQ:AMZN) Web Services (AWS) have entered into a multi-year, multi-billion-dollar agreement to co-invest in custom chip designs. "This expansion of our longtime relationship with AWS reflects the strength of our process technology and delivers differentiated solutions for customer workloads," said Gelsinger. "Intel's chip design and manufacturing capabilities, combined with the comprehensive and broadly adopted cloud, AI and machine learning services of AWS, will unleash innovation across our shared ecosystem and support the growth of both businesses, as well as a sustainable domestic AI supply chain." This arrangement represents a significant broadening of the existing strategic partnership between the two tech giants, aiming to empower customers to handle various workloads and boost AI application performance. As part of the deal, Intel will manufacture an AI fabric chip for AWS using its most advanced process node, Intel 18A, and a custom Xeon 6 chip on Intel 3. The collaboration between Intel and AWS is not new, with a history dating back to 2006. AWS is also contributing to the region's technological development with a planned investment of $7.8 billion to expand its data center operations in Central Ohio, adding to its significant investments in the state since 2015.

Intel announces Amazon custom chip deal and foundry split

Amid mounting losses, Intel is restructuring to become more efficient and boost profitability. Computer giant Intel has announced a multiyear deal to develop custom chips for Amazon Web Services (AWS). In a memo sent to employees yesterday (16 September), CEO Pat Gelsinger said that Intel and AWS will develop a custom semiconductor for AI computing on the Intel 18A. They will also develop a custom Xeon 6 chip on Intel 3, building on the existing partnership between the companies which has seen Intel produce processors for AWS. "Today's announcement is big," Gelsinger said in an interview yesterday. "This is a very discerning customer who has very sophisticated design capabilities." Gelsinger expects "deep engagement" with AWS on designs spanning Intel 18A, 18AP and 14A. Intel made a number of announcements in the memo, which came after a pivotal board meeting last week. The company is under pressure to cut costs by $10bn as sales have shrunk in recent years. Last month, the company announced a plan to cut 15pc of its workforce, about 15,000 staff, as part of its cost-cutting measures. Gelsinger said in the memo that the company is already more than halfway to its targeted workforce reduction. Intel to separate Foundry Gelsinger also announced that Intel's Foundry business will become a wholly owned, independent subsidiary, with no change to its leadership team. This continued decentralisation is part of the process Intel initiated earlier this year with its separation of profit and loss and financial reporting for the Intel Foundry. This structure provides a "clear separation and independence" of the Intel Foundry from the rest of Intel, Gelsinger said. "It also gives us future flexibility to evaluate independent sources of funding and optimise the capital structure of each business to maximise growth and shareholder value creation." The foundry business reported an operating loss of nearly $7bn in 2023 and in April of this year, the company warned that the losses were expected to grow in 2024. The company also plans to exit two-thirds of its real-estate globally by the end of 2024, and has paused its projects in Poland and Germany for two years. However, Ireland will remain Intel's European hub and the planned packaging factory in Malaysia will be completed. In better news for the company, it has been awarded up to $3bn in direct funding under the US CHIPS and Science Act by the US government to secure its domestic market. "As the only American company that both designs and manufactures leading-edge logic chips, we will help secure the domestic chip supply chain," Gelsinger said. Following the memo, Intel stocks, that were taking a slump this year, jumped by 8pc. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Intel Lands Amazon Chip Deal Amid Foundry Split, Plant Pullback

Intel Corp. has made a raft of announcements over the past 24 hours in an effort to prove that a turnaround for the troubled chipmaker is starting to bear fruit. Chief among them: It struck a multibillion-dollar deal with Amazon.com Inc.'s Amazon Web Services cloud unit to co-invest in a custom AI semiconductor. It's shelving new factories in Germany and Poland. It may receive as much as $3 billion in US government funding to make chips for the military. And it's turning its ailing manufacturing business, or foundry, into a wholly owned subsidiary.

Intel's Amazon chip deal lifts investor confidence in money-losing foundry unit

"The deal provides Intel with some credibility as it looks to gain traction with new external customers. In addition, it will help Intel sell itself as a supplier of custom AI silicon chips" said Angelo Zino, senior equity analyst at CFRA Research. Intel's stock has plunged nearly 60% this year and has lagged chip firms, including Nvidia and TSMC, as it missed out on an AI-driven boom in chip demand. The company has been trying to regain the manufacturing edge it lost to TSMC by building out its foundry unit, which has been the centerpiece of CEO Pat Gelsinger's turnaround strategy. AWS is among the first major customers Intel has announced a definitive deal with. It had said in February Microsoft would use its services to manufacture a custom computing chip. But "meaningful" revenue from the capital-intensive foundry unit is not expected until 2027, even as expensive investments sap cash flow and draw investor ire. To ease the pressure, Intel said it would pause chip factory projects in Poland and Germany by about two years, raising doubts about the nearly 10 billion euros ($11.14 billion) in subsidies from Germany for its two plants in the country. "The move ... should help to boost cash flow, even if the focus on US-based fabs is unlikely to go down well in the EU. It will no doubt gain plaudits in Washington though and help Intel preserve important relationships," Russ Mould, investment director at AJ Bell, said. (Reporting by Deborah Sophia and Arsheeya Bajwa in Bengaluru; Editing by Arun Koyyur)

Intel and AWS to expand strategic collaboration on chip manufacturing

(Reuters) - Intel and Amazon's AWS said on Monday they would expand their collaboration, including a co-investment in custom chip designs, under a multi-year, multi-billion-dollar framework. Intel's shares were up 9% in extended trading. As part of the collaboration, the chipmaker will produce an AI fabric chip for AWS on Intel 18A, its most advanced process node. The company also said it plans to establish Intel Foundry as an independent subsidiary of Intel. (Reporting by Juby Babu in Mexico City; Editing by Krishna Chandra Eluri)

Intel Lands Amazon Chip Deal Amid Foundry Split, Plant Pullback

(Bloomberg) -- Intel Corp. has made a raft of announcements over the past 24 hours in an effort to prove that a turnaround for the troubled chipmaker is starting to bear fruit. Chief among them: It struck a multibillion-dollar deal with Amazon.com Inc.'s Amazon Web Services cloud unit to co-invest in a custom AI semiconductor. It's shelving new factories in Germany and Poland. It may receive as much as $3 billion in US government funding to make chips for the military. And it's turning its ailing manufacturing business, or foundry, into a wholly owned subsidiary. The news follows a meeting of Intel's board last week, during which executives presented ways to conserve cash while keeping Chief Executive Officer Pat Gelsinger's longer-term turnaround plan on track. The CEO's effort hinges on transforming Intel into a foundry, but the Santa Clara, California-based company has been slow to line up customers. A high-profile client such as Amazon represents a notable win. Intel shares rose as much as 4.8% after trading opened on Tuesday. They had been down 58% this year, closing at $20.91 on Monday. Gelsinger, who embarked on a bold comeback effort for Intel in 2021, has had to scale back some of his ambitions in the name of efficiency. With sales shrinking and losses piling up, the company announced plans last month to slash 15,000 workers, find $10 billion in cost savings and suspend Intel's dividend. Now he's going further to rein in expansion plans, especially overseas. The Poland and Germany construction projects will be paused for about two years depending on market demand. Another one in Malaysia will be completed but only put into operation when conditions support it, Intel said. The postponement of the German factory marks a setback for the European Union's semiconductor ambitions and is likely to reignite controversy in Berlin over where to allocate €10 billion ($11 billion) in earmarked subsidies. Although Intel is freezing work on new factories in Germany and Poland, it said it remains committed to its US expansion in Arizona, New Mexico, Oregon and Ohio. The move to separate Intel's foundry operations from the rest of the company is aimed in part at convincing prospective customers -- some of whom compete with Intel -- that they are dealing with an independent supplier. Bloomberg had previously reported that the company was weighing this option. "We still have things to learn about becoming a foundry," Gelsinger said in the interview. "I need lots of customers." Intel is also looking to speed up efforts to execute the $10 billion in cost savings and focus its products better on AI computing, an area where rival Nvidia Corp. has excelled. And it hopes to pare its real estate globally by about two-thirds by the end of the year. Additionally, the company reiterated plans to sell part of its stake in semiconductor maker Altera Corp. to private equity investors. The business, which Intel bought in 2015, was separated from its operations last year with the goal of taking it public. Amazon Web Services is the largest provider of cloud computing, and it could help build confidence that Intel can compete with the likes of foundry leader Taiwan Semiconductor Manufacturing Co. AWS has used Intel processors over the years, but has been shifting more toward in-house designs -- the very products that Intel may now help manufacture. The two companies will coinvest in a custom semiconductor for artificial intelligence computing - what's known as a fabric chip - in a "multiyear, multibillion-dollar framework," according to a statement Monday. The work will rely on Intel's 18A process, an advanced chipmaking technology. "Today's announcement is big," Gelsinger said Monday of the deal. "This is a very discerning customer who has very sophisticated design capabilities." Microsoft Corp., another major cloud-computing provider, announced plans in February to use Intel for some of its in-house chips as well. In another win, Intel said earlier Monday that it's eligible to receive as much as $3 billion in US government funding to manufacture chips for the military. The effort, called the Secure Enclave, aims to establish a steady supply of cutting-edge chips for defense and intelligence purposes. That news helped send the shares up 6.4% in regular trading Monday. The Secure Enclave award is separate from a possible $8.5 billion Chips and Science Act grant that Intel is set to receive to support factories across four US states. The projects include a facility in New Albany, Ohio, that Intel has said could become the world's largest chipmaking operation. Intel still has a long way to go to win back Wall Street's full confidence. After years of losing ground to rivals and seeing its technological edge slip, the Silicon Valley pioneer is valued at less than $90 billion. It no longer ranks as one of the top 10 chip companies on that basis. Nvidia, meanwhile, now has a market capitalization of about $2.9 trillion. Intel shocked investors with a bleak financial report last month, triggering the biggest single-day stock decline in decades. Analysts described the announcement as Intel's worst-ever earnings report. Gelsinger, in a letter to employees, acknowledged that the chipmaker's performance has drawn negative scrutiny -- and spurred speculation over what might happen to the company. The only way to "quiet our critics" will be to deliver results and execute better, he said. This week's announcements are a step toward that, he said. "Is it good enough? No. Is it substantial? Yes," he said in the interview. "I've reupped my commitment. We're going to finish a seminal assignment."

Intel and AWS to expand strategic collaboration on chip manufacturing

Sept 16 (Reuters) - Intel (INTC.O), opens new tab and Amazon's (AMZN.O), opens new tab AWS said on Monday they would expand their collaboration, including a co-investment in custom chip designs, under a multi-year, multi-billion-dollar framework. Intel's shares were up 9% in extended trading. As part of the collaboration, the chipmaker will produce an AI fabric chip for AWS on Intel 18A, its most advanced process node. The company also said it plans to establish Intel Foundry as an independent subsidiary of Intel. Reporting by Juby Babu in Mexico City; Editing by Krishna Chandra Eluri Our Standards: The Thomson Reuters Trust Principles., opens new tab

Intel and AWS to expand strategic collaboration on chip manufacturing

Intel and Amazon's AWS said on Monday they would expand their collaboration, including a co-investment in custom chip designs, under a multi-year, multi-billion-dollar framework. Intel's shares were up 9% in extended trading. As part of the collaboration, the chipmaker will produce an AI fabric chip for AWS on Intel 18A, its most advanced process node. The company also said it plans to establish Intel Foundry as an independent subsidiary of Intel. Published - September 17, 2024 09:32 am IST Read Comments

Intel Developing AI Chips for Amazon in Multibillion-Dollar Deal

After a summer of mass layoffs and crashing chips, Intel is moving forward with a multiyear, multibillion-dollar chip deal with Amazon's cloud computing unit, Amazon Web Services. As part of the deal announced Monday, Intel will design and produce at least two different AI-capable chips for AWS. One of the Intel AI chips will use its 18A process node, while the other will be a chip based on Intel's Xeon 6, built on Intel 3. The companies have already been working together for years, and plan to deepen their dies through the chip deal. Amazon and Intel are also continuing to pour money into their operations in Ohio, with Amazon making plans for a multibillion-dollar data center and Intel building two chip factories in the state's New Albany region. Intel alone hopes its Ohio plans will create over 3,000 jobs in the area. "This collaboration between Intel and AWS is a great development for US-based manufacturing and solidifying Ohio as a leader in AI," said Ohio Governor Mike DeWine in a statement. "Today's announcement furthers Intel's commitment to US manufacturing sites, like Ohio's, as well as AWS's commitment to its nearly decade-long investment in our state." Like much of big tech, Amazon has bet big on the promise of generative AI. It's invested in Anthropic, which makes the Claude chatbots, and has added generative AI features across Amazon's shopping site through AI-generated descriptions and its "Rufus" chatbot. AWS is also offering AI-as-a-service through its cloud computing division, including a coding assistant dubbed "Q" and an AI app generator. Intel, in turn, could stand to gain financially from the AI boom as one of the US's largest chip manufacturers. But Intel has faced some challenges this year, specifically with its 13th and 14th-generation core desktop chips. The crashing chips have sparked legal investigations, and could lead to multiple class-action lawsuits, though Intel has said its laptop chips aren't impacted by the bug. Over the summer, Intel also confirmed it was making dramatic cuts to its workforce, laying off 15,000 employees, reportedly to improve its financial situation. Earlier this year, the Biden administration announced $8.5 billion for Intel to build more chip factories in the US through the 2022 Chips Act. This week, Intel received another $3 billion in direct funding under the Chips Act for the US "Secure Enclave" program, which is intended to help design advanced chips for government purposes.

Intel and AWS commit to multi-billion-dollar chip collaboration By Investing.com

SANTA CLARA, Calif. & SEATTLE - Intel Corporation (NASDAQ: NASDAQ:INTC) and Amazon Web Services (AWS), a subsidiary of Amazon.com (NASDAQ: NASDAQ:AMZN), announced today a significant expansion of their strategic collaboration with a multi-year, multi-billion-dollar investment in custom chip designs. This partnership is aimed at enhancing the performance of artificial intelligence (AI) applications and supporting a wide range of customer workloads. Intel will develop an AI fabric chip for AWS using its most advanced process node, Intel 18A, and a custom Xeon 6 chip on Intel 3. The AI fabric chip is expected to drive innovation and support the growth of both Intel and AWS businesses, while also fostering a sustainable domestic AI supply chain. Intel's CEO, Pat Gelsinger, highlighted the strength of Intel's process technology and the potential for this collaboration to deliver differentiated solutions. Matt Garman, CEO at AWS, emphasized their commitment to delivering powerful cloud infrastructure and unlocking new AI capabilities for their customers. The collaboration also aims to accelerate semiconductor manufacturing in the United States, with Intel continuing its commitment to build leading-edge manufacturing facilities in New Albany, Ohio. AWS plans to invest $7.8 billion in expanding its data center operations in Central Ohio, adding to its previous investment of $10.3 billion in the state since 2015. Ohio Governor Mike DeWine praised the development for U.S.-based manufacturing and for solidifying Ohio as a leader in AI. The partnership between Intel and AWS reflects an 18-year relationship dedicated to providing organizations with the tools to deploy workloads in the cloud efficiently. Looking ahead, Intel and AWS plan to explore additional custom designs based on Intel 18A and future process nodes, including Intel 18AP and Intel 14A, which are expected to be produced in Intel's Ohio facilities. This announcement is based on a press release statement and contains forward-looking statements that involve risks and uncertainties, including the possibility that the collaboration may not yield the expected benefits or may face delays or increased costs. The companies caution against placing undue reliance on these forward-looking statements, which are subject to change based on new information or developments. In other recent news, the Competition Commission of India (CCI) has found that e-commerce giants Amazon and Flipkart have breached local competition laws. The investigation revealed that both companies favored specific sellers on their platforms, negatively affecting other businesses. Additionally, the CCI pointed out that such preferential treatment was partly funded by the companies' foreign investments, creating an environment where only these favored sellers could thrive on the platforms. The implicated smartphone makers, including industry leaders Samsung (KS:005930) and Xiaomi (OTC:XIACF), along with other smartphone manufacturers, are now facing increased scrutiny and potential legal challenges. The CCI reports specifically named these companies as having engaged in the controversial practice of exclusive phone launches in collaboration with Amazon and Flipkart. Meanwhile, BofA Securities has maintained a Neutral rating on Etsy (NASDAQ:ETSY), with a steady price target of $61.00. The firm believes that recent rule changes could reduce advertising costs for Etsy, but they suggest that the overall impact on Etsy's Gross Merchandise Sales (GMS) will be limited. In wage-related news, Amazon has announced a 7% wage increase for its drivers, marking a significant investment in its delivery service partners. The company stated, "We'll invest an additional $660 million over the next year in DSP rate card increases and bonuses," reflecting Amazon's ongoing efforts to enhance its delivery network and improve conditions for its drivers. As Intel Corporation (NASDAQ: INTC) and Amazon Web Services (AWS) deepen their strategic partnership, it's pertinent to look at Amazon.com's (NASDAQ: AMZN) financial health and market standing to understand the potential impact of this collaboration. According to InvestingPro data, Amazon boasts a massive market capitalization of $1.94 trillion, underlining its position as a tech behemoth. InvestingPro Tips for Amazon highlight the company's significant role in the Broadline Retail industry and its high earnings multiple, which reflects investor confidence in its growth trajectory. Despite trading at a high Price / Book multiple of 8.22, Amazon's profitability over the last twelve months and analysts' predictions for continued profitability this year suggest a strong financial foundation to support such ambitious collaborations. The real-time metrics show that Amazon's revenue growth remains robust, with a 12.32% increase over the last twelve months as of Q2 2024. This, coupled with a substantial gross profit margin of 48.04%, demonstrates Amazon's ability to generate earnings efficiently. Furthermore, Amazon's operating income margin stands at 9.0%, indicating solid profitability from its core operations. These financial metrics are particularly relevant as Amazon's partnership with Intel is set to enhance AI capabilities, a move that could further drive growth and profitability. With Intel's focus on semiconductor manufacturing and Amazon's planned investment in data centers, both companies appear well-positioned to capitalize on the burgeoning AI market. For those interested in more detailed analysis, there are additional InvestingPro Tips for Amazon available at https://www.investing.com/pro/AMZN, providing a deeper dive into the company's financials and market performance.

Intel to Separate Foundry Business, Strikes AI Networking Chip Deal with Amazon

Intel's stock jumped more than 8% in after-hours trading after CEO Pat Gelsinger published a memo outlining several ways he plans to revive the firm, including by making an artificial intelligence networking chip with Amazon and receiving more funding from the government. He said the chip designer plans to make its money-losing chip manufacturing business, Intel Foundry, an independent

Intel inks AI chip deal with AWS, pauses plans in Poland and Germany | TechCrunch

Intel has announced a key customer win and changes to its foundry business as the beleaguered chipmaker looks to mount a turnaround. In a blog post, Intel CEO Patrick Gelsinger said the company would pause its chip fabrication projects in Poland and Germany by two years "based on anticipated market demand," and consider pulling back on its chip packaging and testing factory in Malaysia. Intel previously pledged to spend over $36.72 billion to build semiconductor factories in Magdeburg, Germany, $4.6 billion on a chip plant near the Polish city of Wroclaw, and $7 billion on its Malaysia footprint. Relatedly, Intel is taking steps to transition its chip foundry division, Intel Foundry, to an independent subsidiary, Gelsinger said. Intel Foundry's leadership isn't changing and the subsidiary will remain within Intel, but Intel Foundry will also gain its own operating board including independent directors. In a win for said foundry business, Gelsinger revealed that Intel has signed a deal with AWS to co-develop an AI chip using Intel's 18A chip manufacturing process. Intel has also agreed to produce a custom Xeon 6 processor for AWS, building on an existing partnership between the two companies. "We have tripled our deal pipeline since the beginning of the year," Gelsinger said of Intel Foundry's business, describing the AWS deal as a "multi-year, multi-billion-dollar framework" that'll potentially involve additional chip designs. "This [...] demonstrates the continued progress we are making to build a world-class foundry business." Intel's cost-cutting and dealmaking -- along with a newly-awarded $3.5 billion contract to build chips for the Pentagon -- sent the company's stock soaring over 6% at market close. It's a bright spot in Intel's otherwise grim fiscal year. In Q1, Intel posted a $437 million net loss -- a loss that widened to $1.6 billion in Q2. Intel Foundry posted $5.3 billion in operating losses in H1, despite a slight year-over-year climb in revenue. Intel also reportedly lost out on a major customer, Sony, after failing to come to a chip manufacturing agreement for Sony's upcoming PlayStation 6 console. A Sony tie-up would've contributed $30 billion to Intel's foundry business, according to Reuters. This summer, Intel announced a $10 billion cost-reduction plan, which included laying off 15,000 staffers through separation and early retirement offerings. (Intel says it's more than halfway through the process and expects to wrap up by the end of the year.) The chipmaker has also reportedly considered selling its autonomous driving arm Mobileye and its enterprise networking division.

Intel to spin off chip fab business unit as AWS signs up for custom AI chips - SiliconANGLE

Intel to spin off chip fab business unit as AWS signs up for custom AI chips Intel Corp. has said it will spin off its chip fabrication business as part of its ongoing plan to put the brakes on a yearslong decline, stem billions of dollars in losses and prop up its tumbling stock price. In an announcement today, Intel Chief Executive Pat Gelsinger said the plan is for Intel Foundry to become a fully independent subsidiary of the company, with "independence" from Intel itself. The change means that Intel Foundry will set up its own board of directors and report financial earnings separately from Intel itself. In addition, the chipmaker said it will halt work on two factories it's currently building in Germany and Poland, with plans to restart once there is enough market demand. However, Intel will continue to push forward with the construction of new fabs in Arizona, Ohio, Oregon and New Mexico, having just received an extra $3 billion in funding from the U.S. government. Meanwhile, Intel is also planning to sell off part of its stake in Altera, the programmable chip business unit that it acquired back in 2015. Other aspects of the plan include reducing its global real estate footprint by around two-thirds. According to Gelsinger, spinning off Intel Foundry as a fully independent subsidiary will enable it to evaluate independent funding sources. The decision was made days after Gelsinger and other executives met with Intel's board of directors to assess the future of the company. Intel had originally made the foundry business a key element of its turnaround strategy, saying a couple of years ago that it would use the business to manufacture semiconductors for other chipmakers, enabling it to compete with Taiwan Semiconductor Manufacturing Co., which makes chips but doesn't design them itself. However, Intel Foundry has reportedly been a big drag on Intel's finances, draining around $50 billion from its coffers over the last two years. By spinning off Intel Foundry, Intel will hope to improve the results of its core chip design business. There is also a chance that, in future, Intel might spin off Intel Foundry entirely as a standalone, publicly-traded company, one person with knowledge of the company's inner dealings told Reuters. With its own operating board and corporate structure in place, the mechanics of such a move would be much easier, if Intel decides to pursue such an option in future. In a related move, Intel will pause its chip fabrication projects in Germany and Poland for "approximately two years, based on anticipated market demand," Gelsinger said. The company will also abandon its plans to build a new chip fab in Malaysia, but will push ahead with its projects in the U.S. No doubt, the decision to continue building its U.S. chip fabs was motivated by the additional grant of $3 billion given to the company by President Joe Biden's administration, as part of the CHIPS and Science Act that aims to foster the growth of a strong, domestic chipmaking market. According to Intel, the funding is earmarked for the "Secure Enclave" program, which is a collaborative project between the chipmaker and the U.S. Department of Defense, aimed at creating more secure chips for the military. Under President Biden's administration, the U.S. has invested billions of dollars into building out its semiconductor manufacturing capacity to reduce its reliance on Taiwan, where most of the world's chips are manufactured. The U.S. sees this reliance on Taiwan as a geopolitical risk, due to China's ambitions to reunite that territory with the mainland. That's why Intel is currently building four separate chip fabs in four different U.S. states. Back in March, the company received $8.5 billion from the government to accelerate those projects. There was some good news for Intel too, with the company announcing that it has agreed a multiyear deal with Amazon Web Services Inc. to produce custom chips for artificial intelligence. The deal extends a long-running partnership with that company, with AWS being one of Intel's biggest customers, buying millions of its central processing units to power its cloud servers each year. The deal could potentially give Intel an entry into the lucrative market for AI chips, which is currently dominated by its rival Nvidia Corp.'s graphics processing units. While Intel does build its own chips for AI, such as its Gaudi 3 accelerators, Nvidia's GPUs are the preferred choice of just about everyone, hence the door to the AI chip market had essentially been slammed shut in Intel's face. AWS has offered its own AI chips, including one called Trainium, for years as a more affordable alternative to Nvidia's GPUs. Google LLC and Microsoft Corp. also produce their own AI chips. Few details about the new Amazon AI chips were revealed, but Intel said they'll be built on its new 18A chipmaking process, which is currently being refined at one of the fabs still under construction, in Ohio. The deal should help to inspire confidence in the 18A process, which was rocked earlier this month when Reuters reported that another of Intel's partners, Broadcom Inc., was less-than-satisfied with its performance during a recent evaluation. That report said Broadcom is studying whether or not it can rely on the Intel 18A process for its own chips, once it enters into production next year. Intel has big plans for the 18A process, with Microsoft also keen to use it for its next-generation chips. With all the news today, Intel will be hopeful that it can finally get back on track with its bid to re-establish itself as one of the world's foremost chipmakers. The company's fortunes have dwindled over the last five years or so, due in part to its failure to anticipate the rise of AI and also because of the emergence of Advanced Micro Devices Inc. as a major competitor in its traditional server and personal computer chip businesses. In fiscal 2023, Intel's chipmaking business racked up operating losses of more than $7 billion, and in its most recent earnings call, it disappointed investors with results that came in below expectations. Last month, the chipmaker announced it will layoff 15,000 workers in its largest-ever round of job cuts. It remains to be seen if Intel will ever be able to regain its crown as the world's chipmaking king, but Gelsinger indicated that he's optimistic about his chances of pulling it off. "This is the most significant transformation of Intel in over four decades," he said in a statement. "Not since the memory to microprocessor transition have we attempted something so essential. We succeeded then - and we will meet this moment and build a stronger Intel for decades to come."

Intel stock jumps on plan to turn foundry business into subsidiary and allow for outside funding

Intel shares jumped almost 10% in extended trading on Monday after the company said it plans to turn its foundry business into an independent unit with its own board and the potential to raise outside capital. As part of CEO Pat Gelsinger's effort to turn around the struggling chipmaker, Intel said in a memo to employees that it will also sell off part of its stake in Altera. Gelsinger said the restructuring would allow Foundry to "evaluate independent sources of funding," and comes days after Intel's board met to assess the direction and future of the company. The foundry business, which Intel plans to use to manufacture chips for other customers, has been a big drag on its bottom line, with the company spending roughly $25 billion on it for the last two years. Beyond just considering outside funding, Intel is weighing whether to spin off the foundry business, possibly into a separate publicly traded company, according to a person with knowledge of the matter who declined to be named to discuss confidential information. With a standalone "operating board" and a cleaner corporate structure, the mechanics of a separation become far easier than trying to turn a fully-integrated unit into a separate company. Intel has lost almost 60% of its value this year, as the company has lost market share in its core PC and data center market and watched Nvidia run away with the market for chips that power artificial intelligence workloads. Last month, Intel reported disappointing quarterly results, sparking the sharpest selloff in 50 years, and said it would lay off over 15% of its workforce as part of a $10 billion cost-reduction plan. Intel will also pause its fab efforts in Poland and Germany "by approximately two years based on anticipated market demand," Gelsinger said. The chipmaker will also pull back on its plans for its Malaysian factory. U.S. manufacturing projects will remain unaffected, the company said. The company is also roughly halfway towards the layoffs announced in August, Gelsinger said. Intel also announced on Monday that it had entered into a deal with Amazon Web Services to produce custom chips for AI. The move is a vote of confidence in Intel's quest to manufacture custom chips for companies in its foundry business, in addition to designing its own products. It extends a long-running partnership between the two companies. Amazon is a large end customer of Intel chips to power its AWS servers, and will buy a custom Xeon processor from Intel as well, Intel said. It also will allow Intel a new foothold in the growing industry for AI server chips. While Intel has several products that can be used for AI, including one called Gaudi 3, Nvidia has largely taken control of the market. Amazon has developed its own AI chips, including one called Trainium, for over five years. Companies such as Amazon, Microsoft, and Google have invested heavily in custom chips to run AI in hopes that theirs would be less expensive or offer other advantages over than Nvidia's general-purpose GPUs. The company said that the chips would be made on the company's 18A process, which is expected to be used in production in 2025. Analysts expect the manufacturing technology to be similar to TSMC's forthcoming 2nm process. (The first chips using TSMC's 3nm process are shipping now in Apple's iPhone.) Intel said that it would perform its most advanced manufacturing, including the AI chip for AWS, at its plant in Ohio that's currently under construction. "All eyes will remain on us. We need to fight for every inch and execute better than ever before. Because that's the only way to quiet our critics and deliver the results we know we're capable of achieving," Gelsinger said.