Intel and Amazon Web Services (AWS) have announced a multiyear, multibillion-dollar investment in a custom semiconductor for artificial intelligence, known as a fabric chip, utilizing Intel's advanced 18A chipmaking technology. Following this news, Intel's shares rose over 8% after a significant decline of 58% this year, closing at $20. 91. Intel CEO Pat Gelsinger expressed the importance of this partnership, highlighting AWS as a discerning customer with sophisticated design capabilities. This announcement came after a crucial board meeting where Intel decided to delay new factories in Germany and Poland while maintaining its U. S. expansion in states like Arizona and Ohio. Gelsinger, aiming for efficiency amid shrinking sales and mounting losses, revealed plans to cut 15, 000 jobs, achieve $10 billion in cost savings, and suspend the company's dividend. The construction projects in Poland and Germany are on hold for about two years, contingent on market demand. Meanwhile, a facility in Malaysia will be finished but operational only when market conditions permit. Executives presented strategies at the board meeting focused on conserving cash while pursuing Gelsinger's shift towards a foundry model for manufacturing chips for external clients. While initial customer alignment has been slow, securing Amazon as a client is viewed as a significant achievement. Intel is prioritizing advancements in AI computing, an area where rival Nvidia has found success, and aims to reduce its global real estate footprint by about two-thirds by year-end. Additionally, Intel plans to sell a portion of its stake in Altera Corp. , which it acquired in 2015. AWS, the largest cloud provider, could bolster Intel's competitiveness against companies like Taiwan Semiconductor Manufacturing Company (TSMC), as AWS has been moving towards in-house designs.

Similarly, Microsoft has also signaled plans to use Intel for in-house chip manufacturing. In a strategic move, Intel's foundry operations, known as Intel Foundry Services (IFS), are set to become a wholly owned subsidiary to enhance credibility with potential customers. Gelsinger acknowledged the need for further learning in the foundry space and the importance of acquiring customers. Moreover, Intel announced eligibility for up to $3 billion in U. S. government funding to produce chips for military use through a project called the Secure Enclave, boosting its share price by 6. 4%. This award is independent of a prospective $8. 5 billion grant under the Chips and Science Act to support U. S. manufacturing facilities. Despite these developments, Intel still faces significant challenges restoring investor confidence, as its market value has dwindled to under $90 billion, and it no longer ranks among the top 10 chip companies. In contrast, Nvidia has achieved a market capitalization of approximately $2. 9 trillion. Gelsinger recently acknowledged the scrutiny faced by Intel following a dismal earnings report last month, calling it the worst in the company's history and leading to a significant stock drop. He emphasized that results will be the key to dispelling criticism, stating that while today's announcements may not be sufficient, they are substantial steps forward in fulfilling his commitment to revitalize the company.