Intel’s contract manufacturing division, known as its foundry business, has secured Amazon Web Services (AWS) as a customer to produce custom artificial intelligence (AI) chips, the companies announced on Monday. This partnership provides a significant boost to Intel as it continues to expand its foundry operations.
Following the announcement, Intel’s shares rose by 8%. CEO Pat Gelsinger shared in a memo to employees that Amazon’s AWS has committed to a multibillion-dollar deal, which includes paying Intel for chip design and manufacturing services. Intel will manufacture an “AI fabric chip” for AWS using its cutting-edge 18A process, the most advanced technology available for external customers.
AWS, which already develops several chips for its data centers, has chosen the company to package one version of these custom AI chips. The companies also revealed that the company expects to create additional designs for AWS using its future 18AP and 14A manufacturing processes.
Intel is taking multiple steps to enhance its overall business performance, as the memo also addressed planned cost cuts and strategies to boost profitability and competitiveness. This follows it’s disappointing second-quarter earnings report. Among these changes, the company is selling a stake in its programmable chip business, Altera, and pausing construction of chip factories in Germany and Poland, while reaffirming its commitment to expanding manufacturing in the U.S.
Gelsinger highlighted that it’s foundry business will gain more independence, operating as a separate subsidiary with its own board overseeing the unit. This shift will allow the foundry division to accept outside capital, further strengthening its operations. Earlier this year, the company separated the financial performance of its foundry unit from its chip design business, setting the stage for this new structure.
In addition to the AWS deal, Intel also announced that it had secured up to $3 billion in funding from the U.S. CHIPS and Science Act, supporting its Secure Enclave program. The company is also moving forward with planned layoffs, notifying around 15,000 employees in mid-October as part of its broader restructuring efforts.
