Intel divests foundry business, partners with Amazon to develop AI chips

2024-09-18

Intel is undergoing a profound business restructuring, officially divesting its foundry business and embarking on an extraordinary journey of custom AI chip production in collaboration with Amazon Web Services (AWS). This series of strategic adjustments aims to revitalize Intel's leading position in the semiconductor industry. The newly established foundry subsidiary will enjoy a high degree of autonomy, equipped with an exclusive board of directors and an open financing window. This innovative architecture aims to attract customers who are cautious about cooperating directly with their direct competitors. In the foundry field, Intel has achieved a milestone collaboration with AWS - a long-term, multi-billion-dollar agreement. Under the agreement, Intel will use its cutting-edge 18A process node to tailor AI chips for AWS and produce customized Xeon 6 chips on Intel's 3rd generation process platform, jointly driving performance leaps in AI applications and complex workloads. Intel CEO Pat Gelsinger highly praised this collaboration, calling it "significant" and emphasizing AWS's cautious attitude as a partner and its excellent design capabilities. This partnership not only deepens the existing relationship between the two parties but also signifies unlimited possibilities in improving technical performance and innovation capabilities. Furthermore, this collaboration also demonstrates Intel and AWS's shared commitment to promoting the development of the domestic semiconductor manufacturing industry in the United States. AWS has announced a $7.8 billion investment to expand data centers in central Ohio, adding to its previous investments totaling $10.3 billion in the state, further consolidating its strategic layout in the region. However, faced with market challenges, Intel is also actively controlling costs. It announced a two-year suspension of construction projects in Poland and Germany to cope with the uncertainty of current market demand. Meanwhile, the facility in Malaysia will continue construction but will be put into operation when conditions are ripe. These measures follow Intel's recent announcement of laying off 15,000 employees and implementing a $10 billion cost-saving plan, demonstrating the company's determination to optimize resource allocation and focus on core competencies. Nevertheless, Intel's expansion plans in several states in the United States have not stopped, with progress steadily being made in Arizona, New Mexico, Oregon, and Ohio. For Intel, the current restructuring and collaboration with AWS come at a critical period when the company is seeking breakthroughs and catching up with competitors. Despite a nearly 60% decline in stock price in 2024, the release of these positive signals quickly boosted market confidence, resulting in a 7% increase in stock price in after-hours trading. This strategic adjustment by Intel marks a significant shift in its global expansion strategy, focusing on domestic and strategic initiatives. With the independent operation of the new subsidiary and deepening collaboration with AWS, Intel's ability to successfully reshape its glory in the fiercely competitive semiconductor market undoubtedly attracts great attention to its future development trajectory.