Intel's plan to consolidate its chip foundry includes a strategic partnership with AWS

Intel has published a note by CEO Pat Gelsinger to the company's employees. Gelsinger's note outlines Intel's next steps towards its transformation, which includes a recent expansion of the company's longstanding collaboration with AWS, incoming direct funding from a Secure Enclave award, and several changes to Intel's chip-making unit, including pauses in its Germany and Poland facilities, based on predictions for market demand.

The first two announcements mark important milestones for Intel. The Secure Enclave program aims to expand the manufacturing of latest-generation semiconductors for the US government. As the only American chip designer and manufacturer, Intel will receive up to $3 billion in direct funding to help secure the US chip supply chain. Additionally, the expansion of the partnership between Intel and AWS includes a co-investment in custom chip designs. As a result of this arrangement, Intel will manufacture an AI fabric chip for AWS on Intel 18a, in addition to a custom Xeon 6 chip on Intel 3 which builds on both companies' existing partnership, in which Intel produces Xeon Scalable processors for AWS.

As for the changes in the structure and operations of Intel's Foundry, Intel has stated that the foundry will become an independent subsidiary within the company. In addition to providing a greater degree of separation and independence for the foundry's customers and suppliers, the new structure will enable Intel to evaluate different sources of funding and optimize the capital structure for each business. Aside from the creation of an independent operating board, the Foundry will not undergo any significant changes in structure and composition.

However, Intel did announce a change in the pace of its investments in manufacturing. Intel's fab in Ireland will become the company's European fund as projects in Germany and Poland enter a two-year pause. The company is also seeing into scaling back operations in its Malaysia design and manufacturing hub. All other locations will remain unchanged, including its planned investments in the US. Intel expects that these changes, along with efforts to streamline its product portfolio and restructure its workforce will unlock a transformation that will not require more radical measures.