Intel Stock Pops On Plan For Its Foundry To Make Custom Chips For Amazon

Intel's foundry, or contract manufacturing business, has signed Amazon's cloud services unit as a customer for making custom artificial intelligence (AI) chips, the companies announced.

Intel secured Amazon as a multibillion-dollar customer, paying Santa Clara, California-based Intel for design services and manufacturing. I Image: Intel

This deal gives the chipmaker a significant vote of confidence, according to a report by Max A. Cherney for Reuters.

Intel's shares surged approximately 8% in extended trading after CEO Pat Gelsinger sent a memo to employees announcing that Intel had secured Amazon as a multibillion-dollar customer, paying Santa Clara, California-based Intel for design services and manufacturing.

The memo also outlined planned cost cuts and detailed steps Intel will take to revive the company after reporting disappointing second-quarter earnings last month.

Amazon's AWS cloud computing division already designs several chips for its data centers and has contracted Intel to package at least one version.

Intel will produce an "AI fabric chip" for AWS using the company's 18A process, its most advanced technology available for external customers. Intel also expects to handle additional designs from Amazon using its upcoming 18AP and 14A manufacturing processes.