AMD Set to Join Forces with Intel as Major Foundry Customer

Key points

• AMD and Intel are in talks for AMD to become an Intel Foundry customer, according to a report from Semafor.
• This partnership could help AMD manufacture its chips in the US, which would be beneficial for defense contracts and supercomputer deals.
• Intel would benefit from having AMD as a customer, as it would help legitimize their semiconductor processes and attract more US-based customers.

As a reporter, I have learned that AMD, a major player in the semiconductor industry, might be joining forces with its longtime competitor Intel. According to a report from Semafor, AMD is in talks to become an Intel Foundry customer. This means that AMD would use Intel’s manufacturing facilities to produce some of its chips. The report does not specify how much of AMD’s business would move to Intel, but it’s clear that this partnership could have significant implications for both companies.

AMD currently splits its business between TSMC and GlobalFoundries, a chip manufacturer formed in 2008 when AMD sold off its fabrication facilities. However, Intel is capable of manufacturing AMD’s most advanced chips, including those using 7nm and 5nm process nodes. This makes the potential partnership between AMD and Intel more plausible.

In fact, AMD and Intel have a history of collaboration. In 2004, Intel licensed AMD’s x86-64 64-bit extensions, which are still used in every Intel processor today. Anshel Sag, principal analyst with Moor Insights & Strategy, believes that this partnership is "entirely possible," especially if AMD is looking to manufacture its chips in the US for defense contracts and supercomputer deals.

The Trump administration’s push for domestic manufacturing of semiconductors is also a factor in this potential partnership. The administration wants 50% of chips sold in America to be manufactured domestically, and is imposing tariffs on chips that are not. AMD has already faced export restrictions on its GPUs meant for China, and manufacturing its chips in the US could help the company avoid these restrictions.

For Intel, this partnership would be a significant win. Alvi Nguyen, senior analyst with Forrester Research, believes that having AMD as a customer would help legitimize Intel’s semiconductor processes and attract more US-based customers. Intel has already partnered with Nvidia to jointly make PC and data center chips, and Nvidia has taken a $5B stake in Intel. The Trump administration has also invested $11.1B in Intel, making this partnership a strategic move for all parties involved.

As the semiconductor industry continues to evolve, it’s clear that partnerships like this one will play a crucial role in shaping the future of the industry. With AMD and Intel working together, we can expect to see significant advancements in chip manufacturing and a stronger presence of US-based companies in the global market. Microsoft, which relies heavily on Intel and AMD for its Azure and Windows Server products, will likely be watching this development closely. The potential benefits of this partnership for Microsoft and its customers are significant, and we will continue to monitor the situation as it unfolds.

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