Intel’s chip contract manufacturing division, Intel Foundry Services (IFS), has signed a deal with Microsoft , that will result in it manufacturing a custom chip for the software and cloud giant.

The agreement was part of Intel’s announcement about a “world’s first systems foundry designed for the AI era,” which also unveiled new IFS roadmap that features Intel 14A process technology, specialised node evolutions and new Intel Foundry Advanced System Assembly and Test (ASAT) capabilities to help customers achieve their AI goals.

The announcements were made at Intel’s first foundry event in San Jose, California, dubbed ‘Intel Foundry Direct Connect’, where customers and high profile figures gathered, including US Secretary of Commerce Gina Raimondo, ARM CEO Rene Haas, Microsoft CEO Satya Nadella, OpenAI CEO Sam Altman and others.

Intel manufacturing employee supervises the completed packaging process at an Intel lab in Chandler, Arizona.
Image credit Intel

Microsoft deal

At this event, it was confirmed that Microsoft plans to use Intel’s foundry services to manufacture a custom computing chip utilising the Intel 18A process.

“We are in the midst of a very exciting platform shift that will fundamentally transform productivity for every individual organization and the entire industry,” said Microsoft’s Nadella.

Automated handlers for completed packaging at work at Intel Lab in Chandler, Arizona.
Image credit Intel

“To achieve this vision, we need a reliable supply of the most advanced, high-performance and high-quality semiconductors,” said Nadella. “That’s why we are so excited to work with Intel Foundry, and why we have chosen a chip design that we plan to produce on Intel 18A process.”

“AI is profoundly transforming the world and how we think about technology and the silicon that powers it,” added Intel CEO Pat Gelsinger.

“This is creating an unprecedented opportunity for the world’s most innovative chip designers and for Intel Foundry, the world’s first systems foundry for the AI era. Together, we can create new markets and revolutionize how the world uses technology to improve people’s lives.”

Factory tool that places lids on data centre system-on-chips.
Image credit Intel

In April 2023 Intel Foundry Services (IFS) had signed an agreement with ARM to allow IFS to work with the British chip designer to ensure mobile phone chips can be made in its chip fabs.

Competition for TSMC

A few years ago Intel had faced investor questions as to whether it should keep its own chip design capabilities and manufacturing fabs under one roof, after it experienced well documented setbacks in the development of 10nm and 7nm processes, which in turn hindered its competitiveness in the market.

Soon after CEO Pat Gelsinger took charge of the chip giant in 2021, he unveiled a turnaround plan (IDM 2.0) that doubled down on its inhouse chip manufacturing capabilities when he opened Intel’s chip plants to outside customers via Intel Foundry Services.

Automated handlers make selections for test validation.
Image credit Intel

Intel intends to use IFS to take the fight to the world’s largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Co (TSMC).

Indeed Intel was quoted by Reuters as saying on Wednesday that it expects to beat an internal deadline of 2025 to overtake TSMC in advanced chip manufacturing.

Intel was quoted by Reuters as saying it plans to retake the mantle of making the world’s fastest chips from TSMC later this year with Intel 18A manufacturing technology, and extend that lead into 2026 with new technology called Intel 14A.

AI tech

Intel also reportedly said Microsoft will use its 18A technology to make an undisclosed chip and that it now expects $15 billion of foundry orders, up from the $10 billion it had previously told investors.

Reuters reported that Intel also has a special technology that analysts say will be useful for speeding up power-hungry artificial intelligence chips.

Nvidia, the leader in the AI chip market, has reportedly said it is evaluating Intel’s manufacturing technology, but the two companies have not announced a deal.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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