Intel Signs Amazon as Chip Client, Spins Off Semiconductor Foundry

September 17, 2024 05:07 AM PDT | By Team Kalkine Media

Intel Signs Amazon as Chip Client, Spins Off Semiconductor Foundry — Image source: Shutterstock

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Intel Corp (NASDAQ:INTC) has secured a significant, multi-year partnership with Amazon Web Services (AWS) for the production of artificial intelligence (AI) chips. The collaboration will focus on developing an AI fabric chip and custom Xeon 6 processors, leveraging Intel's advanced technology nodes, including Intel 18A, Intel 18AP, and Intel 14A.

In addition to this strategic partnership, Intel has revealed plans to restructure its foundry businessThis segment will be spun off into a separate subsidiary with its own governance structureThis move is intended to enhance operational clarity and independence from the broader Intel organizationThe subsidiary structure aims to attract major clients and provide flexibility in funding and capital optimization.

These announcements come in the wake of Intel being awarded up to $3 billion in direct funding under the CHIPS Act for its 'Secure Enclave' programDespite receiving substantial subsidies, Intel has faced challenges in adopting cutting-edge chipmaking technologies, resulting in declining profits and workforce reductions.

The restructuring of Intel's foundry business is seen as a strategic effort to improve its competitive position in a market currently dominated by TSMC and SamsungBy establishing a distinct subsidiary, Intel seeks to better serve its external foundry customers and suppliers while optimizing its capital structure to foster growth and value creation.

Deutsche Bank have highlighted the AWS partnership as a particularly significant development, viewing it as a strong endorsement of Intel’s foundry capabilitiesThe CHIPS Act funding further supports the viability of Intel's semiconductor manufacturing processes, positioning the company for future advancements and market gains.

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