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Intel launches foundry business with the AI era in mind

Intel (INTC) unveiled its Intel Foundry services which will use its external customers to help build out its multi-billion-dollar chip manufacturing plants, a step in its greater ambitions in the AI landscape. Intel CEO Pat Gelsinger spoke at an event in San Jose, California to boast about how this segment will put Intel at the forefront of AI chip development.

Yahoo Finance Tech Editor Dan Howley joins the Live show to discuss the announcement from Intel and what it means for the company going forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

AKIKO FUJITA: Intel making headlines at its first foundry event. This morning, the company laying out a roadmap to become a leader in AI chips. Here with the details, we've got our very own tech reporter Dan Howley. And Dan, Pat Gelsinger bringing in some of the big names in AI to make this announcement.


DAN HOWLEY: That's right, Akiko. Sam Altman, Satya Nadella, they're both being-- or are a part of this announcement. Really, what we're seeing here is kind of Intel pushing its foundry services and AI. And they're basically saying, look, this is one of the first foundries of the AI era. Yeah, you know, I mean, column A, column B, it's all kind of marketing at this point. But one of the-- some of the important things that Intel points out is they say that they're going to be the number two largest foundry in the world by 2030. That's what they hope to do. That would be behind TSMC.

They also say that they believe that they'll regain process leadership with its 18A node in 2025. That means that they would be the go to company at that point. And they're also announcing their new Intel 14A process, adding that to the roadmap that they have. Previously, it had stopped at 18A, and the one prior to that was 20A. And I think when it comes to the foundry business itself, they say that they're unveiling an emerging business initiative, where they're going to collaborate with Arm to provide foundry services for Arm-based systems on a chip.

So they're moving forward with this foundry idea, where they're not just going to be building chips for themselves but for third parties, similar to what TSMC does. And so that's where they believe that they can become the second largest foundry in the world. And look, if they can pull it off, whoa, that's impressive. But you know, 2030? It's 2024. So you've got six years to pull it off.

RACHELLE AKUFFO: So Dan, given where they are now, I mean, Intel's foundry segment isn't a very large part of their business currently, do they actually have what it takes to be number two in the world?

DAN HOWLEY: Yeah, I mean, look their-- their foundry services is as far as revenue goes in the millions of dollars compared to billions for their data center and their CPU offerings for consumers and businesses. And so it's obviously not the big part of their business, but it is growing to their benefit. And Pat Gelsinger regularly mentions on investor calls after earnings that we have such and such a vendor who's working with us on foundry services, but he doesn't drop the names of those companies. And that's something that investors, analysts have been hoping to hear more about, what these companies are that are supposedly working with or as Intel says currently working with them or working out deals to work with them.

So you know, I mean, they could become a major player in this space if all goes according to plan. Now, there have been some issues with the chip market as of late, where companies have been pulling back on orders just because there's been some issues as far as-- there was first a too few chips, then too many chips, and the PC market started to struggle. Now it's starting to pick back up kind of sort of hopefully soon. And the AI market is really continuing to take off. We'll see if that can continue to do so. But if they manage to get all their ducks in a row and continue to-- to perform, then they could become this big foundry player.

But you know, right now, like I said, it doesn't contribute much as far as-- as far as overall revenue. And getting there is going to be difficult and will mean really getting more and more customers on board. And hopefully, they tell us who they are.

RACHELLE AKUFFO: Indeed. Because of course for now, TSMC really holding that crown pretty steadily there. Appreciate you getting us up to speed our very own Dan Howley.