Intel Stock Surges on Potential AMD Partnership

Intel is reportedly in preliminary discussions with rival AMD regarding the potential manufacturing of AMD chips within Intel’s foundry business. The news, initially reported by Semafor, sent Intel shares soaring by 7% on Wednesday, while AMD saw a more modest increase of over 1%.

Securing AMD as a foundry customer would represent a significant strategic victory for Intel, as it aggressively courts major players to bolster its foundry operations. Industry analysts suggest that a high-profile client like AMD would not only provide a crucial revenue stream but also instill confidence in Intel Foundry’s ability to execute and innovate, thereby attracting further investment in advanced manufacturing technologies.

The implications of such a deal extend beyond mere contract manufacturing. It would signal a remarkable level of trust from AMD, which competes directly with Intel in the x86 processor market for PCs and servers. By entrusting a portion of its chip production to Intel, AMD would effectively be sharing critical intellectual property with its primary competitor, a move that speaks volumes about Intel’s perceived capabilities and safeguards in place.

While the extent of AMD’s potential reliance on Intel’s foundry remains unclear, the report underscores a potential shift in the competitive landscape. AMD currently relies on TSMC for the bulk of its chip manufacturing. Diversifying its manufacturing base to include Intel could provide AMD with increased supply chain resilience and potentially access to cutting-edge manufacturing processes.

Intel’s foundry ambitions have recently received substantial boosts through strategic investments, including backing from the U.S. government, and Nvidia, signaling growing confidence in the company’s turnaround efforts led by CEO Lip-Bu Tan. These investments are seen as critical enablers for Intel to scale up its manufacturing capacity and develop next-generation process technologies to compete effectively with industry leaders like TSMC and Samsung. However, Nvidia has not committed to using Intel’s foundry.

Year-to-date, Intel shares have surged by nearly 77% as investors increasingly bet on the chipmaker’s resurgence. The potential AMD deal further validates Intel’s strategic vision and its commitment to becoming a major player in the global foundry market.

When reached for comment, an Intel representative declined to provide further details. An AMD spokesperson stated, “AMD does not comment on rumor or speculation.”