Intel Corp (NASDAQ:INTC, ETR:INL) has won a multi-year, multi-billion dollar AI chip partnership with Amazon Web Services and announced plans to split its foundry business into a separate subsidiary with its own governance structure within the wider group.
The news followed reports earlier in the day that the Santa Clara-headquartered group will be awarded up to $3 billion in direct funding under the CHIPS Act for the 'Secure Enclave' program.
Intel Foundry comprises the semiconductor manufacturing wing that chief executive Pat Gelsinger has been at pains to grow, though the technology trailblazer has struggled to find a place in the heavily concentrated market which largely consists of a duopoly between TSMC and Samsung.
Intel has been slow to adopt the most cutting-edge chipmaking technology despite netting billions in subsidies from the US government’s CHIPS Act.
This has led to tumbling profits and large-scale workforce reductions.
In August, it was reported that Intel had brought in advisors to explore options to restore its declining business operations.
Intel hopes that splitting the foundry business will help to entice big-ticket clients away from its largest competitors.
“A subsidiary structure will unlock important benefits,” said the group in a flurry of announcements after the US market close.
“It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel.
“Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.”
Intel announced that it will be producing artificial intelligence chips for Amazon Web Services via a multi-year, multi-billion-dollar partnership.
The partnership is to produce an AI fabric chip, as well as engagements for additional foundry designs on Intel 18A, Intel 18AP and Intel 14A nodes.
Away from the foundry business, the AWS collaboration also involves the production of custom Xeon 6 processors.
Analysts at Deutsche Bank said this AWS news was the "most material" of the announcements, and added that the CHIPS reports provide "further endorsement by external parties of the viability of INTC's foundry processes".