San Francisco, California – Intel, the chipmaker giant, has recently secured a major deal with Amazon’s cloud services unit to produce custom artificial intelligence chips. This partnership has skyrocketed Intel’s shares by approximately 8% in extended trading, indicating a significant vote of confidence in the company’s capabilities. The agreement entails Amazon’s cloud computing division collaborating with Intel to design and manufacture a specialized “artificial intelligence fabric chip” using Intel’s cutting-edge 18A process, the most advanced version available to external customers.
Intel’s CEO, Pat Gelsinger, announced the deal in a memo to employees, highlighting the significance of securing Amazon as a multibillion-dollar customer. The memo also outlined Intel’s strategic cost-cutting measures in response to its recent disappointing second-quarter earnings report. Among these measures is the decision to sell a stake in Intel’s programmable chip business, Altera, and to pause construction at chip factory projects in Germany and Poland for two years.
In an effort to revitalize the company, Intel is prioritizing its core technology behind central processing units (CPUs) and reorganizing various divisions, including those focused on automotive and “edge” technologies. The establishment of an independent subsidiary for Intel’s foundry business is a key component of Gelsinger’s turnaround plan, aimed at enhancing market competitiveness and efficiency.
Furthermore, Intel is set to receive up to $3 billion in direct funding from the U.S. CHIPS and Science Act, as part of the Secure Enclave program. This funding will provide crucial support for Intel’s operations and growth initiatives. Additionally, the company plans to notify approximately 15,000 employees of upcoming layoffs in the middle of October, as part of its broader restructuring efforts.
Overall, Intel’s partnership with Amazon underscores its commitment to innovation and growth in the semiconductor industry. The collaboration not only solidifies Intel’s position as a leader in chip manufacturing but also paves the way for future advancements in artificial intelligence technology. With strategic cost-cutting measures and a focus on core technology, Intel is poised to navigate challenges and capitalize on opportunities in the rapidly evolving tech landscape.