Intel Corp has landed Microsoft Corp as a customer for its made-to-order chip business, marking a key win for an ambitious turnaround effort under chief executive officer Pat Gelsinger.
Microsoft plans to use Intel’s 18A manufacturing technology to make a forthcoming chip that the software maker designed in-house, the two companies said at an event on Wednesday.
They did not identify the product, but Microsoft recently announced plans for two homegrown chips — a computer processor and an artificial intelligence (AI) accelerator.
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Intel has been seeking to prove it can compete in the foundry market, where companies produce custom chips for clients. It is a major shift for the semiconductor pioneer, which once had the world’s most advanced chipmaking facilities and kept them to itself. These days, Intel is racing to catch up with companies such as Taiwan Semiconductor Manufacturing Co (台積電), which leads the foundry industry.
Meanwhile, Microsoft is looking to secure a steady supply of semiconductors to power its data-center operations — especially as demand for AI grows. Designing its own chips also lets Microsoft fine-tune the products to its specific needs.
“We need a reliable supply of the most advanced, high-performance and high-quality semiconductors,” Microsoft chief executive officers Satya Nadella said in a statement. “That’s why we are so excited to work with Intel.”
The broader industry has struggled to get enough advanced silicon — particularly Nvidia Corp’s highly prized accelerator chips, which help develop chatbots and other AI services.
For Intel, securing a large customer for its foundry business should help reassure investors that Gelsinger’s comeback bid remains on track. His plan involves building out the chipmaker’s factory operations to handle the increased load — a costly gamble — as well as restoring Intel’s once-dominant technological prowess.
The company is looking to governments in the US and Europe to help defray the costs, and seeing Microsoft on board might help that effort.
Intel has held talks with the administration of US President Joe Biden to secure more than US$10 billion in subsidies under the Chips and Science Act, Bloomberg reported last week.
Microsoft and cloud-computing rivals Amazon.com Inc and Alphabet Inc’s Google are among the largest buyers of advanced chips, which they use to power their data centers. They have increasingly turned toward using their own designs — a trend that’s hurt Intel in its most lucrative business. Acting as a foundry for Microsoft and others could help grab back at least a portion of that lost revenue.
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