Intel announced a significant boost to its struggling chip-making business with a partnership with Amazon Web Services. This partnership involves coinvesting in a custom chip design for AWS, with Intel Foundry producing an AI fabric chip for AWS on Intel 18A. This announcement came after Intel confirmed it would receive up to $3 billion in funding under the CHIPS and Science Act to manufacture chips for the military. The multi-year, multi-billion-dollar framework between Intel and AWS is part of Intel’s efforts to catch up with competitors in the increasingly competitive chip industry.
Once the dominant chipmaker in the world, Intel has faced challenges in keeping up with the mobile computing wave. Market leaders like Qualcomm and Texas Instruments have surpassed Intel in market value, while Nvidia has become one of the most valuable public companies in the world due to the AI boom. Intel’s partnership with AWS, along with the government funding to boost domestic chip making, demonstrates the progress the company is making to build a world-class foundry business. Intel continues to build plants in various US states while pausing production in Germany and Poland for approximately two years.
Intel’s CEO, Pat Gelsinger, provided updates on the company’s goal to cut $10 billion by 2025. This restructuring involves transforming Intel into a global chip manufacturer to compete with Taiwan’s TSMC. The company has already made progress in its goal to cut 15,000 employees by the end of the year and plans to inform more employees of layoffs in mid-October. Additionally, Intel aims to reduce its global real estate footprint by about two-thirds by the end of 2024. The company’s shares jumped 6% in after-hours trading following the announcement, indicating positive investor sentiment regarding Intel’s recent developments.
The partnership with AWS and the government grant signal Intel’s commitment to staying relevant in the increasingly competitive chip market. As technology continues to advance, companies like Intel must innovate and adapt to meet the evolving needs of consumers and businesses. The strategic investments in custom chip designs and domestic manufacturing are essential steps for Intel to regain its position as a key player in the chip-making industry. With a focus on cost-cutting, restructuring, and expansion, Intel is positioning itself for future growth and success in the rapidly changing tech landscape.
By leveraging partnerships with industry leaders like AWS and investments in cutting-edge chip technology, Intel is laying the foundation for sustainable growth and profitability. The company’s focus on building world-class foundries, reducing operating costs, and streamlining operations demonstrates its commitment to long-term success. As Intel continues to evolve its business model and expand its presence in key markets, it is poised to capitalize on emerging opportunities in the semiconductor industry. With a strategic vision and a strong leadership team, Intel is well-positioned to overcome current challenges and thrive in a competitive global market.
