Intel, AWS to expand AI chipmaking partnership

Intel (INTC) and Amazon Web Services (AMZN) have announced a co-investment into a multi-year strategic collaboration to design and produce custom AI chips.

Yahoo Finance tech editor Dan Howley joins Market Domination Overtime to discuss this news as Intel attempts to further its foundry business to better compete in the global chip market.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Luke Carberry Mogan.

Video transcript

Just moments ago, Intel and Amazon web services announcing a co investment in custom chip designs under a multi year multi billion dollar framework.

This is a significant expansion of the two companies long standing strategic collaboration.

Joining us now with more on this is Yahoo Finance's Dan Halley and Dan.

We're seeing Intel shares up more than 10% after hours.

Yeah, it's uh not really gonna be uh the fix that Intel needs uh as far as well.

At least Intel investors need, they're off about 60 something percent or we're off about 60 something percent uh last week uh year to date uh with their, their stock price.

But this kind of collaboration is important for Intel as it builds up its foundry business uh which is basically a, a spin off or uh a new segment.

I should say that they built out where they're not only going to be building chips for themselves, but for third parties.

And so this is a, a kind of example of that with, with a on, it's going to be building A I fabric chips on the Intel 18 A platform.

That's one of the ones that they have set up uh Microsoft, by the way, is also going to be building a custom chip on that as well as custom Xon six chips.

Uh And so this is all for data center for A I and it is a big deal for Intel to be seeing more customers come in.

Uh on this foundry side of things.

The important thing is how many more they can add over time.

They're really trying to take on TS MC, uh, is what they want to do and become, uh, a foundry for, for a lot of other companies.

Uh, it's gonna take a long time for that to happen, especially as they're dealing with, uh, so many financial headaches at this point, their last quarterly earnings, uh, they cut their dividend, uh, they, uh, had, uh lower than anticipated guidance.

Uh, and so not a great look, uh, as far as the financials go in the prior quarter, but this is, it is an important development for them.

Yeah, on, on that point, Daniel, we spoke to a couple of different smart financial analysts who cover intel and, you know, they've been sort of, I think suggesting that that Co Pat Gelsinger was in some ways on the hot seat, you know, with the stock under the kind of pressure it has been.

Um, I'm just curious what you, what you think this news means for him.

You know, how much of a boost in the arm is it for Pat Gelsinger, you know, hi his leadership, his tenure, his strategy there.

I, I think this is exactly what he needs.

Um Look, I mean, Intel was, you know, losing to a MD as far as capabilities go.

Uh They're turning that around.

Uh they obviously were losing to TS MC.

Uh as far as just, you know, the sheer amount of chips that are built.

Um They weren't really the vanguard of the chip industry anymore.

And so that's what Pat Gelsinger is trying to do here.

Obviously, it's costing a lot of money, they're building out different facilities across the world that takes a lot of cash.

Um And when they're not performing as well on the sales side of things that, that obviously doesn't uh equal success.

And so, you know, in addition to this, they also recently announced their, their latest laptop chip, uh they're facing competition from Intel uh sorry, A MD as well as Com uh Qualcomm on the mobile side on laptops.

And so this new chip is supposed to be combat that as well as Apple's capabilities.

Uh you know, the PC side is really still their bread and butter.

And so any success there is going to benefit them greatly.

And so, you know, it seems there are kind of little starts to Intel's turnaround showing up here.

Uh Investors just have to agree and obviously, you know, if anybody steps in and says they have a problem with, with the CEO, that, that would be an even bigger issue.