Intel is making Intel Foundry a separate company. This will allow it to receive outside investments. Although the proposed German chip factory is delayed, the news elsewhere is a lot more positive.
Rarely in Intel’s 56-year existence has it experienced so many setbacks in such a short space of time. With months to go, 2024 can already be called a disastrous year for the company. More than half of its market value went up in smoke. It is forcing Intel to make radical choices. Although there is no talk of a final breakup yet, preparations for one are already underway. As an independent subsidiary, Intel Foundry will from now on act as a separate company. It is a step beyond the “autonomous business unit” it was before.
Also read: Will Intel split itself up after all?
Other hard choices
After last week’s crisis meeting, Intel news is coming in at a rapid pace. For example, the proposed Intel plant in Magdeburg, Germany, is being built at least two years later than thought. The cost cutting is needed due to the US chipmaker’s tough financial weather. Although the news is certainly negative, it appears its breaking is perfectly timed to coincide with a bunch of good reports elsewhere.
Indeed, domestically, the news is more positive for Intel Foundry. Following Microsoft’s lead earlier this year, the chipmaker is also going to provide hyperscaler AWS with custom AI chips. An “AI fabric chip” will be constructed on Intel 18A. There has been continuous speculation about this chip process in recent weeks. Are the yields as expected? Will customers want to buy in? News about Broadcom added fuel to the fire when it turned out that that company had renounced an Intel collaboration after test-driving the process node. Now that AWS is joining forces with Intel Foundry, Intel’s claim that all is well seems a bit more credible.
Incidentally, AWS is also going to buy chips from Intel itself. Custom Xeon 6 processors intended for cloud servers will be manufactured on the Intel 3 process. Both parties cite that cooperation between the two has been going on since the very beginning of AWS. When the first Amazon EC2 instance appeared back in 2006, it was on an Intel chip. In all the tumult of 2024, Intel hopes this will at least show a sign of consistency and peace of mind.
CHIPS Act money
The U.S. government is also helping Intel move forward. $3 billion has been awarded to it from the CHIPS and Science Act. The so-called Secure Enclave initiative focuses on U.S. national security. To ensure a strategic advantage militarily, America is putting money into expanding chip production capacity and developing increasingly advanced processors.
Another government investment may follow. This involves conventional, commercial chip production and may appear in Intel Foundry’s bank account after the due diligence process.
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