Intel shares jump on deal to make chips for Amazon

STORY: Intel just got a big boost from Amazon.

The chipmaker said Monday it had won a deal to make custom AI processors for the search giant’s could computing division.

That’s a big vote of confidence in Intel’s troubled contract manufacturing unit, or foundry.

Shares in the firm surged 8% in after-hours trade as a result.

Intel has been battered by problems of late, revealing disastrous second-quarter earnings last month.

The foundry has been among the big worries, after the firm warned it wouldn’t turn a profit until 2027.

Before this week it had struggled to land any marquee customers.

That had led to speculation it could be sold off.

Now Intel boss Pat Gelsinger has confirmed the foundry will stay within the company, and be central to a turnaround plan.

However, it will be established as an independent subsidiary, with its own board.

Meanwhile, Intel is taking other steps to raise money and cut costs.

That includes selling a stake in its programmable chip unit Altera, and pausing work on new factories in Germany and Poland.

The company also plans to lay off some 15,000 workers.

On Monday, Intel also said it had won a $3 billion contract from Washington to develop a so-called “Secure Enclave” for microelectronics.

That’s meant to guarantee a U.S.-made supply of critical parts for weapon systems and other national security products.

The move is part of Biden administration efforts to bring home, or “re-shore”, chip manufacturing and tech research.