Intel shares jump on chip deal with Amazon | CNN Business

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Intel's struggling chip-making business got a boost Monday from a high-profile client: Amazon

The announcement comes after Intel said earlier in the day that it would receive up to $3 billion in funding under the Chips and Science Act to make chips for the military.

Intel Foundry and Amazon Web Services will invest in a custom chip design for the latter and “announced a multi-year, multi-billion-dollar framework,” according to a release.

“Specifically, Intel Foundry will build an AI Fabric chip for AWS on the Intel 18A,” Intel CEO Pat Gelsinger said in a statement Monday.

Intel, once the world's most dominant chipmaker, has struggled to keep up with the mobile computing wave, with a stranglehold on PCs and Macs, and Qualcomm and Texas Instruments, both leaders in mobile chips, have been overtaken in market value.

And, of course, there's Nvidia, which rode the subsequent AI boom into one of the world's most valuable public companies.

Intel's partnership with AWS is part of the chipmaker's effort to play catch-up. The new deal, along with a $3 billion grant from the U.S. government to encourage domestic chip manufacturing and make chips for the U.S. military, “demonstrates the continued progress we are making to build a world-class foundry business,” Intel said in a statement. .

Intel continues to build plants in Arizona, Oregon, New Mexico and Ohio in the US but is shutting down production in Germany and Poland for about two years.

Intel shares jumped 6% in after-hours trading after the announcement.

Gelsinger also gave an update on the company's goal of reducing $10 billion by 2025. Intel changed its business model to try to become a global chip maker to rival Taiwan's TSMC.

The company is more than halfway to its goal of cutting 15,000 jobs by the end of the year and will announce more layoffs in mid-October, the note said. It plans to reduce its global real estate footprint by nearly two-thirds by the end of 2024.