Intel and Amazon Partner to Develop AI Chips Using Advanced 18A Process Technology

Intel’s shares surged 8% after Amazon announced a strategic partnership to develop custom AI chips using Intel's advanced 18A process. This collaboration is a key part of Intel’s Foundry Services expansion and aims to position the company as a leader in AI-era semiconductor manufacturing.

Intel Shares Surge After Amazon Partnership Announcement to Develop AI Chips Using 18A Technology

Following Amazon Web Services (AWS) 's announcement of a strategic partnership with Intel to develop processors using the 18A process node, Intel's shares experienced an 8% increase in after-hours trading, providing the stock a much-needed boost. According to Wccftech, the collaboration will be a significant element of Intel's expanding Intel Foundry Services business, a critical component of CEO Pat Gelsinger's initiatives to revitalize the company's semiconductor manufacturing division.

As Amazon disclosed in its announcement, Ohio officials have approved the partnership. The tech behemoth intends to allocate $7.8 billion to data center operations in Ohio. The agreement also delineates a collaborative investigation of emerging semiconductor manufacturing technologies, such as Intel's 18AP and 14A processes.

Intel and Amazon characterized the agreement as a "co-investment" within a "multi-year, multi-billion-dollar framework" encompassing both Intel products and wafers, although financial details were not disclosed. Intel emphasized its prior partnerships with Amazon, which have enabled the operation of AWS cloud computing instances on Intel platforms.

AWS, Amazon's high-margin, recurring revenue division, has emerged as a dominant force in the cloud computing industry. Like other technology giants, Amazon has historically developed custom processors for its internal software. However, these chips have been primarily based on Arm architecture.

Intel to Develop Custom Xeon and AI Fabric Chips for Amazon Using Advanced 18A Process

According to the new agreement, Intel will initially employ its Intel 3 manufacturing process to construct a custom Xeon 6 processor for Amazon's workloads. According to reports, the performance of Amazon's current EC2 instances has been up to 20% superior to that of their predecessors, which previous Xeon Scalable processors fueled. The increased performance of virtualized "instances" in cloud computing can considerably enhance computing efficiency and reduce costs.

Intel will utilize its 18A process to produce an "AI fabric chip" for AWS and the custom Xeon chip. The company is also collaborating with Broadcom to use the technology, and this procedure is central to Intel's ambitious efforts to reclaim its position as a leader in chip manufacturing. The 2-nanometer node of Taiwan Semiconductor Manufacturing Company (TSMC) is anticipated to introduce the 18A process into production next year.

Intel and Amazon Aim to Lead AI Chip Innovation Amid Growing Competition from NVIDIA and Meta

According to speculation, the AI fabric computer will likely be derived from Arm designs and will serve as a successor to Amazon's current custom processors. However, Intel and Amazon have yet to provide additional information.

Intel's CEO, Pat Gelsinger, has underscored the company's distinctive position in the semiconductor industry. Intel possesses a diverse portfolio of products that can meet the complete spectrum of AI requirements. Gelsinger stated during Intel's first-quarter 2024 earnings call that the company has a "clear line-of-sight to becoming the largest system foundry for the AI era and the second-largest overall by 2030." The Amazon partnership is instrumental in achieving that objective.

Along with tech giants Google and Meta, Amazon is developing in-house processors for AI workloads. The increasing competition in the development of AI chips is indicated by the recent disclosure of Meta's training and inference accelerators and Google's Tensor processors, which Apple already utilizes for AI software training. Meanwhile, NVIDIA continues to dominate AI processors, with companies frantically attempting to acquire its highly sought-after chips, which are presently in short supply.