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Feb 29, 2024 466

Microsoft and Intel strike a custom chip deal that could be worth billions

#global

With the Microsoft deal, Intel notches a big partnership as it seeks to regain its former position at the top of chip manufacturing.

Intel and Microsoft have struck a deal worth over $15 billion, with Intel set to produce custom chips designed by Microsoft for its own use. The announcement came during Intel's Foundry event, although the specific purpose of these chips has not been disclosed, it's speculated that Microsoft is eyeing in-house designs for processors and AI accelerators.

Microsoft CEO Satya Nadella expressed excitement about the partnership, highlighting the transformative potential of the platform shift for productivity in both individual and organizational settings. These custom chips will utilize Intel's 18A process, a key component of Intel's strategy under CEO Pat Gelsinger, who aims to revitalize the company's chip manufacturing capabilities.

For Intel, this collaboration marks a significant step towards reclaiming its position in the chipmaking industry, with Microsoft being its first major customer for the new foundry services. While Intel's move follows the successful playbook of competitors like TSMC, challenges remain, including delays in opening new chip plants and navigating a competitive market landscape.