Intel unveils Amazon deal to produce custom AI chip; pauses Germany, Poland plants

Intel (NASDAQ:INTC) announced a series of moves aimed at shoring up its finances and its technological prowess on Monday, including a deal with Amazon (NASDAQ:AMZN) to manufacture a custom artificial intelligence chip for the Seattle-based tech giant.

Shares of the semiconductor giant jumped more than 10% in extended trading.

Described as a “significant expansion” of the working relationship between Amazon and Intel, the two companies unveiled a “multi-year, multi-billion-dollar” framework which will see Intel produce chips for Amazon, starting with a custom artificial intelligence fabric Chip utilizing Intel’s 18A foundry process technology.

Intel will also create custom Xeon 6 chips using the Intel 3 node for as part of an existing partnership where Intel produces Xeon Scalable processors for Amazon Web Services.

“This expansion of our longtime relationship with AWS reflects the strength of our process technology and delivers differentiated solutions for customer workloads,” said Intel CEO Pat Gelsinger in a statement. “Intel’s chip design and manufacturing capabilities, combined with the comprehensive and broadly adopted cloud, AI and machine learning services of AWS, will unleash innovation across our shared ecosystem and support the growth of both businesses, as well as a sustainable domestic AI supply chain.”

“By co-developing next-generation AI fabric chips on Intel 18A, we continue our long-standing collaboration, dating back to 2006 when we launched the first Amazon EC2 instance featuring their chips,” AWS CEO Matt Garman added. “Our continued collaboration allows us to empower our joint customers with the ability to run any workload and unlock new AI capabilities.”

Other moves

Intel is also pausing construction on new factories in Germany and Poland for approximately two years, “based on market demand,” the company said in a separate statement.

A separate manufacturing hub in Malaysia will be completed, but only put into use when market conditions allow.

Its U.S. manufacturing expansion will remain underway, with Intel building locations in Ohio, New Mexico, Arizona and Oregon, Intel added.

Intel’s board reportedly met earlier this month to discuss a series of moves aided to shore up the company’s finances, including selling assets and postponing construction plans on its global expansion.