Intel stock jumped 6% Wednesday on news the chipmaker is in early talks with rival AMD to manufacture chips through its foundry business. The potential partnership comes as Intel attracts major new investors including the U.S. government, Nvidia, and SoftBank, signaling growing confidence in CEO Lip-Bu Tan's turnaround strategy.
Intel just got the validation it desperately needed. The chipmaker's stock popped 6% Wednesday after Semafor reported that longtime rival AMD is in early talks to manufacture some of its chips through Intel's foundry business.
The potential deal represents a stunning reversal of fortune for Intel's manufacturing arm, which has struggled to land major external customers. AMD currently relies on Taiwan's TSMC for chip production, making any shift to Intel a significant coup for the company's foundry ambitions.
"If AMD were to start manufacturing chips with Intel, it would be a significant win for the company's foundry business," analysts noted in the CNBC report. The partnership would send a powerful signal to the semiconductor industry that Intel can handle sophisticated manufacturing for external clients - even its biggest competitors.
The timing couldn't be better for Intel's turnaround story. Over recent weeks, the company has attracted a parade of high-profile investors betting on its recovery. The U.S. government took an equity stake in August, followed by Nvidia's investment in September and SoftBank's $2 billion commitment just weeks ago.
What makes the AMD talks particularly intriguing is the competitive dynamic at play. The two companies have fought fierce battles in the x86 processor market for decades, with AMD gaining significant ground in recent years. For AMD to trust its manufacturing to Intel signals remarkable confidence in Intel's technical capabilities.
"It would also signal that AMD, which competes with Intel in x86-based chips for PCs and servers, is confident doing its manufacturing with its biggest competitor," the report noted. That confidence doesn't come cheap - foundry partnerships require deep technical integration and long-term commitments.
