According to a statement on Monday, intel has reached a multi-year cooperation framework with Amazon to customize AI chips. Intel and Amazon Web Services (AWS) will jointly invest in customized semiconductors for AI computing, which will rely on intel's 18A process, an advanced chip manufacturing technology.

Intel CEO, Pat Gelsinger, is working to make AWS a customer of the company's manufacturing business. This could bring job opportunities to the new factories that the company is building in the USA and increase his efforts to turn around the struggling chip manufacturer. In 2021, Gelsinger started a bold comeback for intel, but had to give up some ambitions in order to improve efficiency. With ongoing sales decline and accumulated losses, intel announced plans last month to lay off 0.015 million people, save 10 billion dollars in costs, and suspend dividends.

Now, intel is adjusting its expansion plans and focusing on core markets. In particular, intel has further reduced its overseas expansion plans. The construction projects in Germany and Poland have been postponed for about 2 years based on market demand. Intel stated that another factory in Malaysia will be completed, but will only be put into operation under supportive conditions.

During the three-day board of directors meeting last week, executives proposed plans on how to save cash while keeping Gelsinger's transformation plan on track. The CEO's effort depends on transforming intel into a so-called foundry, a chip manufacturer that produces products for external customers. The company has been slow in attracting customers for this project, and securing well-known clients like Amazon represents a significant victory.

Intel also hopes to accelerate the execution of its 10 billion dollar cost-saving plan and better focus its products on the field of AI computing where its competitor Nvidia excels. The company also plans to reduce its global real estate business by about two-thirds by the end of this year. The company also reiterated its plan to sell a portion of its stake in Altera Corp. to private equity investors. Intel acquired the business in 2015 and separated it from its operation last year with the goal of going public.

AWS is the largest cloud computing provider, and it can help intel build confidence and compete with foundry leader Taiwan Semiconductor Manufacturing Company (TSMC). AWS has been using intel processors for years but has been shifting towards internal designs, which are now the products that intel may help manufacture. Another major cloud computing provider, Microsoft, announced in February that it plans to use intel chips in some of its internal processors.

In addition, Intel will establish Intel Foundry Services (IFS) as an independent division. In order to attract more customers, Intel plans to separate the foundry business from its other businesses and make it a wholly-owned subsidiary. This move aims to demonstrate to potential customers that IFS is an independent supplier, especially for those companies that compete with Intel, so that they can collaborate with Intel with more confidence.

In another victory, Intel has received support from the US government. Intel announced earlier on Monday that it is eligible to receive up to 3 billion US dollars in funding from the US government for chip manufacturing for the military. This program, called "Secure Enclave," aims to establish a stable supply of cutting-edge chips for defense and intelligence purposes. The Biden administration has allocated funding to Intel through the Chips and Science Act to provide a stable supply of advanced chips to the US Department of Defense and Intelligence.

Through this program, Intel is expected to win more government contracts, including a potential contract worth up to 3.5 billion US dollars to manufacture semiconductor components for the Pentagon. The funding will be used to support factories in four states in the US. These projects include a factory in New Albany, Ohio, which Intel has said could potentially become the world's largest chip manufacturing facility.

To regain full trust from Wall Street, Intel still has a long way to go. After years of losing to competitors and declining technological superiority, this Silicon Valley pioneer is valued at less than 90 billion US dollars. On top of that, it is no longer one of the top ten chip companies. Meanwhile, Nvidia currently has a market cap of approximately 2.9 trillion US dollars.

Intel's dismal financial report released last month shocked investors and caused the largest single-day plummet in decades. Analysts called it Intel's worst financial report ever.

In a letter to employees, Gelsinger acknowledged that Intel's performance has drawn negative scrutiny and sparked speculation about what may happen to the company. He said that the only way to "silence critics" is to deliver results and improve execution. He said that today's announcement is a step towards that goal.

After a series of news releases, as of the time of writing, Intel's stock rose nearly 8% in post-market trading on Monday.