Intel Corp (INTC) struck a custom chip deal with Microsoft that is worth over USD 15 billion, with Intel revealing the deal during an Intel Foundry Event on 22 February. This comes after Intel’s strategy shifted with Intel’s Chief Executive Officer Pat Gelsinger.
The chips will be designed in-house by Microsoft allowing them to tailor the chips as required, with Intel handling their production. While we do not have the specifics over the use of the chips, the chips may be linked with Microsoft’s recent plans for an artificial intelligence accelerator and a computer processor.
Microsoft’s major push into AI yielded them record revenue with the software giant looking to make long-term investments in the semi-conductor market to avoid shortages. Meanwhile, things have not been going well for Intel as the company is going over a major business shift to catch up to the current dynamic market and reclaim its spot as the chipmaking giant. For more on Microsoft’s recent earnings call, check out our article on it here.
Microsoft will be using Intel’s 18A technology for the custom chips, as Intel enters the foray into the lucrative foundry market which it has not previously been a part of. Microsoft CEO Satya Nadella remarks, “We are in the midst of a very exciting platform shift that will fundamentally transform productivity for every individual organisation and the entire industry, We need a reliable supply of the most advanced, high-performance and high-quality semiconductors. That’s why we are so excited to work with Intel.”
While Intel’s business primarily relied on using their in-house factories to solely design and produce chips themselves, the current market forces them to change this strategy as Gelsinger looks to build out their factory operations.
Meanwhile, now that the semiconductor shortages are over and companies are doubling down on artificial intelligence, Nvidia (NVDA) stock has boomed over the year with the company now valued at $2 trillion.
