Microsoft and Intel collaborates on a custom chip deal that could be worth billions of dollars. Intel with the deal with Microsoft notches a huge partnership as it seeks to regain its former position at the helm of the chip manufacturing.
Microsoft and Intel Custom Chip Deal
During its Intel Foundry event today, Intel revealed a collaboration with Microsoft valued at over $15 billion. Under the agreement, Intel will manufacture custom chips tailored to Microsoft’s specifications. While the exact purpose of these chips was not disclosed by either company, Bloomberg reported that Microsoft has been developing its own designs for processors and AI accelerators.
“We are in the midst of a very exciting platform shift that will fundamentally transform productivity for every individual organization and the entire industry,” Microsoft CEO Satya Nadella in the official press release stated.
Intel Plans To Solidify Its Position in the Chipmaking Industry
Utilizing Intel’s 18A process, which has been a significant focus of its roadmap since the return of CEO Pat Gelsinger, the company aims to solidify its position in the chipmaking industry. By offering chip foundry services, Intel seeks to regain prominence, with Microsoft being its primary customer for this endeavor.
Following a strategy similar to its competitor Taiwan Semiconductor Manufacturing Company (TSMC), which has successful partnerships with major companies like Apple, Qualcomm, and AMD, Intel aims to leverage the production of others’ designs. Gelsinger emphasized the importance of the company’s foundry in its overall strategy during discussions with VentureBeat.
Intel Faces Challenges in the Chip-Making Industry
While more companies are moving towards producing their own custom-designed chips, Intel still faces challenges. The company recently announced a delay in the opening of a $20 billion chip plant in Ohio, pushing it back to 2026 from its original target of 2025. This delay was attributed to sluggish chip market conditions and government grant delays.
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