(Bloomberg) — Intel Corp. shares rose the most in a month after the Information reported that Alphabet Inc.’s Google will rely on it for more than 3 million specialized AI chips in 2028.
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Google decided to tap Intel to make some of its tensor processing units — TPUs for short — after months of testing the chipmaker’s technology, the Information said Monday, citing two unnamed sources.
The media outlet reported that Intel is receiving orders from firms like Google as the Taiwanese chipmaker Taiwan Semiconductor Manufacturing Co. struggles to keep up with demand for its manufacturing capacity.
Intel shares soared as much as 13% to $112.37 in New York. The stock has roughly tripled in value this year.
A representative for Intel declined to comment. Google didn’t immediately respond to a request for comment.
Intel shares recently hit a record after the chipmaker delivered a sales forecast that shattered Wall Street expectations, showing that it’s finally benefiting from a boom in AI spending. The upbeat outlook suggests Chief Executive Officer Lip-Bu Tan is making progress on a once-improbable turnaround. After lining up major investments in Intel last year — helping to strengthen the company’s balance sheet — he’s now delivering on a promise to improve operations.
Nvidia Corp. is also testing whether Intel’s technology can be used to make a forthcoming processor that combines four graphics chips into a single unit, the Information said, citing two unnamed sources. Nvidia didn’t immediately respond to a request for comment.
Still, it’s unclear how much Google and others will rely on Intel’s chip foundry business, which produces semiconductors, compared with its packaging service. The latter offering involves enclosing chips in casing and readying them to be connected to other circuitry.
Intel has told investors that it’s racked up a backlog worth billions of dollars for packaging work. That step in semiconductor production is traditionally of lesser importance and doesn’t cost as much as the process of creating the electronic components out of disks of silicon. But the work has become more important because combining chips in the same package is increasingly being seen as a way to achieve better performance, particularly with data center parts.
An order for 3 million chips wouldn’t change the direction of Intel’s money-losing manufacturing business overnight. It’s equal to the output of a major factory in a month or less. Still, large companies signaling that they’re more willing to trust Intel with their most important work would help bolster the status of its technology and help its chances of winning other customers.
Google, meanwhile, has emerged as one of the most successful makers of in-house AI chips in an industry dominated by Nvidia. The company’s TPUs have become a hot commodity in Silicon Valley in recent months, and Google is looking to build on that momentum with the latest versions.
Nvidia’s graphics processing units, or GPUs, remain the gold standard for AI, particularly for training more advanced models. But a growing number of up-and-comers are vying to take on the chipmaker for inference uses, including by offering chips meant to cut down response times for chatbots and AI agents. Inference is the stage in AI when models are trained and begin generating responses.
–With assistance from Zsana Hoskins and Guinevere Grant.
(Updates shares starting in fourth paragraph.)
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