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In a significant development for the semiconductor industry, Intel is reportedly in the initial phases of negotiations with AMD to potentially onboard the fabless chip manufacturer as a client for its foundry services. This partnership could represent one of Intel’s most noteworthy collaborations since the launch of the Kaby Lake-G architecture.
According to a report by Semafor, which cites sources familiar with the situation, the details surrounding how much of AMD’s chip production might transition to Intel remain unclear. Currently, AMD relies predominantly on TSMC for its chip fabrication, while Intel has also engaged TSMC for certain products.
The facts
Intel’s recent activities indicate a revitalization of its market position, highlighted by a surge in investments. Notably, the US government has acquired a 9.9% stake in Intel, a move that underscores its commitment to the semiconductor sector. Additionally, Softbank made headlines by investing $2 billion in Intel shares, further reflecting confidence in the company’s direction.
Furthermore, Intel has announced new x86 chips that leverage Nvidia’s graphics technology, showcasing a collaborative spirit in the tech industry. In a parallel move, Nvidia has also invested $5 billion into Intel, marking a significant financial partnership. There have even been discussions about potential collaborations between Intel and Apple, indicating a broader trend of alliances among major tech firms.
Pat Gelsinger’s vision
The potential collaboration with AMD aligns with former Intel CEO Pat Gelsinger’s vision of diversifying Intel’s offerings. Gelsinger had previously expressed aspirations to manufacture chips for various leading tech companies, including AMD, despite being former competitors. It remains uncertain whether AMD might consider taking a similar approach as Nvidia by purchasing Intel shares.
The strategic significance of a partnership
Securing AMD as a foundry client would be a pivotal achievement for Intel, which has actively sought out partnerships with various companies to expand its foundry customer base. Current Intel CEO Lip-Bu Tan hinted that the company could discontinue its 18A node technology if demand does not materialize, emphasizing the necessity for a strong customer portfolio.
Both Intel and AMD have not provided comments regarding these discussions as of the publication of this article. However, given the current geopolitical climate, it makes strategic sense for American firms like AMD to consider partnerships with Intel. The Biden administration is advocating for 50% of chips sold in the US to be produced domestically, which could influence corporate strategies significantly.
Regulatory pressures and market dynamics
Additionally, the imposition of tariffs on chips remains a possibility, making domestic collaboration more appealing. AMD has faced challenges recently, including export restrictions on its GPUs, as the US government seeks to limit China’s advancements in artificial intelligence.
While Intel’s foundry technology is generally regarded as being less advanced than that of TSMC, forming a partnership with Intel could serve as a valuable contingency plan for AMD, ensuring it has reliable production capabilities should its current arrangements face disruptions.
The discussions between Intel and AMD could lead to a transformative partnership in the semiconductor industry. As both companies navigate the complexities of the current market environment, the potential implications of such a collaboration warrant close attention.