Intel Soars Late On Foundry Plans, Amazon AI Chip Deal

Intel (INTC) rallied late Monday on a plan to turn its manufacturing business into a subsidiary as well as an expanded partnership with Amazon (AMZN).

The Dow Jones chip giant jumped in Monday’s regular session on a $3 billion federal funding award to make chips for the Pentagon.

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Intel Foundry To Be Independent Unit

Intel also unveiled a major reorganization of its business, including a plan to turn its manufacturing business into an independent unit with its own board, according to a CNBC report.

According to the report, which was based on a memo sent to employees, CEO Pat Gelsinger said the plan would make it possible for Intel’s foundry business to “evaluate independent sources of funding.”

The news follows another report that Intel was considering spinning off or selling its manufacturing business, which also sparked a stock rally late last month.

Once the most dominant semiconductor company in tech, Intel has struggled production issues and other market hurdles that have caused it to fall behind rivals led by AMD (AMD) and Nvidia (NVDA). Its foundry business is far behind Taiwan Semiconductor Manufacturing (TSM).

The Santa Clara, Calif.-based company is seen trailing competitors in major technology trends, including the cloud and artificial intelligence.

But in another positive development, Intel also announced a partnership with Amazon Web Services, to develop custom AI chip designs “under a multiyear, multibillion-dollar framework covering product and wavers from Intel.”

Intel CHIPS Funding

During Monday’s session, Intel announced that the Biden Administration has awarded the semiconductor company up to $3 billion in direct funding as part of the government’s CHIPS and Science Act for the Secure Enclave program. Intel will make chips for the Defense Department.

That followed a Bloomberg report late Friday that Intel could receive up to $3.5 billion in funding.

The new award is separate from $8.5 billion in CHIPS funding announced in March. for Intel plants in Arizona, Ohio, Oregon and New Mexico.

Intel Stock

Intel stock jumped 8% in late trading. Shares leapt 6.4% to 20.91 in Monday’s session, the top performer in the S&P 500. Last week, INTC stock hit worst levels in nearly 14 years.

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