Intel recently received a significant boost to its struggling chip-making business with the announcement of a partnership with Amazon. Under the CHIPS and Science Act, Intel will receive up to $3 billion in funding to manufacture chips for the military. Intel Foundry and Amazon Web Services will be co-investing in a custom chip design for Amazon, marking a multi-year, multi-billion-dollar framework. Specifically, Intel Foundry will produce an AI fabric chip for AWS on Intel 18A. Despite once being the dominant chipmaker, Intel has struggled to keep up with the mobile computing wave, with companies like Qualcomm, Texas Instruments, and Nvidia surpassing it in market value.
The partnership with AWS is part of Intel’s efforts to catch up with its competitors. In addition to the deal with Amazon, Intel also received a $3 billion grant from the US government to boost domestic chip making and produce chips for the US military. The company is continuing to build plants in US states like Arizona, Oregon, New Mexico, and Ohio, while pausing production in Germany and Poland for about two years. Intel’s shares jumped 6% in after-hours trading following the announcement. CEO Pat Gelsinger also provided updates on the company’s goal to cut $10 billion by 2025 and become a global chip manufacturer to rival Taiwan’s TSMC.
Intel has been making significant changes to its business model, including cutting 15,000 employees by the end of the year and planning further layoffs in mid-October. The company is also aiming to reduce its global real estate footprint by about two-thirds by the end of 2024. These cost-cutting measures are part of Intel’s strategy to remain competitive in the chip-making industry. With the support of the US government, partnerships with companies like Amazon, and ongoing initiatives to streamline operations, Intel is working towards regaining its position as a leading chip manufacturer.
The collaboration with Amazon represents a significant milestone for Intel as it seeks to strengthen its position in the chip-making market. By partnering with AWS and securing funding from the US government, Intel is taking steps to improve its manufacturing capabilities and compete with industry leaders like TSMC. The company’s focus on developing custom chip designs, such as the AI fabric chip for AWS, demonstrates its commitment to innovation and meeting the evolving demands of the tech industry. Intel’s recent successes and strategic partnerships highlight its determination to overcome past challenges and chart a new path towards growth and success in the chip-making sector.
In response to changing market dynamics and increased competition, Intel is implementing a series of initiatives to streamline its operations, reduce costs, and enhance its manufacturing capabilities. The company’s efforts to cut $10 billion by 2025, reduce its global workforce, and optimize its real estate footprint are aimed at improving efficiency and profitability. By investing in cutting-edge technologies, forming strategic partnerships, and aligning its business strategy with market trends, Intel is positioning itself for long-term success and sustainability. Through its collaboration with Amazon, as well as its ongoing investments in research and development, Intel is poised to regain its competitive edge and drive innovation in the chip-making industry.
