Intel shares jump on chip deal with Amazon

Intel's chip-making division received a significant boost following a partnership with Amazon Web Services (AWS), announced on a Monday. This collaboration includes a multi-year, multi-billion-dollar framework for co-investing in a custom chip design, specifically an AI fabric chip to be produced on Intel's 18A technology. This deal comes alongside Intel's announcement of receiving up to $3 billion in funding from the CHIPS and Science Act, aimed at enhancing domestic chip manufacturing, particularly for military applications. The partnership with AWS is a strategic move for Intel, which has faced challenges in maintaining its market position against competitors like Qualcomm, Texas Instruments, and Nvidia. These companies have outpaced Intel, especially in the mobile and AI sectors. The collaboration is part of Intel's broader strategy to regain its footing in the semiconductor industry and establish itself as a leading global chip manufacturer, rivaling Taiwan's TSMC. In addition to the AWS deal, Intel is actively working on restructuring its operations, aiming to cut $10 billion in costs by 2025. This includes a significant reduction of its workforce, with plans to lay off 15,000 employees by the end of the year. The company is also reducing its global real estate footprint by two-thirds by the end of 2024, indicating a shift in its operational strategy. Despite these challenges, Intel's shares rose by 6% in after-hours trading following the announcement, reflecting investor optimism about the company's future prospects and its commitment to building a world-class foundry business.