Intel’s stock experienced an 8% surge in extended trading following a significant announcement regarding its foundry business. The chip maker revealed that Amazon’s AWS cloud services division has signed on as a customer for custom artificial intelligence chips. This deal, valued in the multibillion-dollar range, represents a major vote of confidence for Intel as it navigates its turnaround efforts.
CEO Pat Gelsinger communicated the development in a memo to Intel employees, highlighting the substantial business from Amazon as a major boost. Intel will leverage its advanced 18A manufacturing process to produce an “artificial intelligence fabric chip” for AWS. The company also anticipates further orders from Amazon utilizing its upcoming 18AP and 14A processes.
In addition to this promising contract, Gelsinger’s memo outlined a series of strategic measures to enhance Intel’s efficiency and profitability. The company reported a challenging second quarter last month, prompting a series of adjustments. Intel plans to sell its stake in the programmable chip business Altera and pause construction on its chip factory projects in Germany and Poland. However, it reaffirmed its commitment to expanding its manufacturing capabilities in the U.S.
Intel is restructuring its business operations to drive its recovery. The foundry business will gain more independence and will be established as a separate subsidiary with its own operating board. This restructuring aims to focus on core CPU technologies and realign several business units, including automotive and edge computing sectors.
The company also secured up to $3 billion in direct funding from the U.S. CHIPS and Science Act, under the Secure Enclave program, to support its manufacturing initiatives. Additionally, Intel plans to notify approximately 15,000 employees about upcoming layoffs as part of its cost-cutting measures.
This deal with Amazon, combined with strategic realignments and financial support from the U.S. government, marks a critical step in Intel’s broader strategy to regain market leadership and operational stability.
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