Intel (NASDAQ:INTC) announced on Monday a series of measures to strengthen its finances and technological performance, including a deal with Amazon (NASDAQ:AMZN) to create a custom artificial intelligence chip for the Seattle-based technology giant.
Shares of Semiconductor giant rose by more than 8% in expanded trade.
In what was described as a “significant expansion” of the collaboration between Amazon and Intel, the two companies unveiled a “multi-year, multi-billion dollar” framework under which Intel will produce chips for Amazon, starting with a custom artificial intelligence chip using Intel’s 18A foundry process technology.
Intel will also build custom Xeon 6 chips using the Intel 3 node as part of an existing partnership where Intel produces Xeon Scalable processors for Amazon Web Services.
“This expansion of our long-standing relationship with AWS reflects the strength of our process technology and delivers differentiated solutions for our customers’ workloads,” Intel CEO Pat Gelsinger said in a statement. “Intel’s chip design and manufacturing capabilities, combined with AWS’ comprehensive and widely deployed cloud, AI and machine learning services, will unleash innovation in our shared ecosystem and support the growth of both companies and a sustainable domestic AI supply chain.”
“By jointly developing next-generation AI fabric chips on Intel 18A, we are continuing our long-standing collaboration that dates back to 2006 when we launched the first Amazon EC2 instance using their chips,” added AWS CEO Matt Garman. “Our continued collaboration enables us to give our mutual customers the ability to run any workload they want and unlock new AI capabilities.”
Foundry Update
Gelsinger also provided an update on his nascent foundry business, while some on Wall Street suggested an exit.
“To build on our progress, we plan to establish Intel Foundry as an independent subsidiary within Intel,” Gelsinger wrote. “This governance structure will complete the process we initiated earlier this year when we separated the income statement and financial reporting for Intel Foundry and Intel Products.”
Gelsinger said the subsidiary structure will bring several benefits, including offering external foundry customers a “clearer separation and independence from the rest of Intel” and the ability to raise external funding.
Other movements
Intel is also pausing construction of new factories in Germany and Poland for about two years, “based on market demand,” the company said in a separate statement.
A separate production center in Malaysia is to be completed but will not come into operation until market conditions permit.
The expansion of production in the US will continue, with Intel building sites in Ohio, New Mexico, Arizona and Oregon, Intel added.
Intel’s board of directors reportedly met earlier this month to discuss a series of measures to repair the company’s finances, including selling assets and delaying construction plans for global expansion.