Shares of Intel jumped after the company said its foundry business would make some custom artificial intelligence chips for Amazon Web Services as it attempts to revive its business.
CEO Pat Gelsinger said in a message to employees 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.
Specifically, Intel Foundry will produce an AI fabric chip for AWS on Intel 18A. “We will also produce a custom Xeon 6 chip on Intel 3 that builds on our 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,” said CEO Pat Gelsinger.
“A subsidiary structure will unlock important benefits,” Pat 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.”
“This expansion of our longtime relationship with AWS reflects the strength of our process technology and delivers differentiated solutions for customer workloads,” said Pat Gelsinger, Intel CEO. “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.”
“At AWS, we’re committed to delivering the most powerful and innovative cloud infrastructure to our customers,” said Matt Garman, CEO at AWS. “By co-developing next-generation AI fabric chips on Intel 18A, we continue our long-standing collaboration, dating back to 2006 when we launched the first Amazon EC2 instance featuring their chips. Our continued collaboration allows us to empower our joint customers with the ability to run any workload and unlock new AI capabilities.”
The analyst said, “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,”.
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.
The Biden administration also recently announced that Intel has been awarded up to $3B in direct funding under the CHIPS and Science Act for the U.S. government’s Secure Enclave program. This program is designed to expand the trusted manufacturing of leading-edge semiconductors for the U.S. government. As the only American company that both designs and manufactures leading-edge logic chips, we will help secure the domestic chip supply chain.
With this expanded collaboration, Intel and AWS underscore their commitments to accelerating U.S.-based semiconductor manufacturing and creating a vibrant AI ecosystem in Ohio. Intel continues to be committed to the New Albany area and its plans to build leading-edge semiconductor manufacturing. AWS is planning to invest $7.8 billion to expand its data center operations in Central Ohio, in addition to the $10.3 billion it has invested in the state of Ohio since 2015.
“This collaboration between Intel and AWS is a great development for U.S.-based manufacturing and solidifying Ohio as a leader in AI,” said Ohio Governor Mike DeWine. “Today’s announcement furthers Intel’s commitment to U.S. manufacturing sites, like Ohio’s, as well as AWS’s commitment to its nearly decade-long investment in our state.”
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