Alphabet taps Intel to make three million in-house chips

Alphabet’s Google has placed an order with Intel to manufacture more than three million tensor processing units in 2028.

Nvidia is also evaluating whether Intel’s technology can ‌be used to make a processor that combines four graphics chips into a single unit, although it has not placed an order with the company yet, the report said.

Intel’s shares rose more than 9% in early trading, set to ​add to the nearly 169% gain so far this year, on the back of signs of ​steady turnaround progress under CEO Lip-Bu Tan.

The potential order for Google’s in-house AI chips would bolster Intel’s contract chip manufacturing business and comes as ​the company tries to claw back its chipmaking crown that it lost to Taiwan’s TSMC following years of management blunders.

Soaring chip demand from the AI boom has left TSMC struggling to bring in adequate supply. That capacity crunch has prompted ​several major AI chip design companies to turn to Intel, The Information said.

The news is “evidence that AI’s ​biggest players are racing to diversify a supply chain still heavily concentrated in TSMC,” said Jacob Bourne, technology analyst ‌at eMarketer.

Since ⁠Tan took charge, Intel has secured billions of dollars of investments from the Trump administration, Nvidia and SoftBank.

It also landed Tesla as the first major customer for its next-generation 14A manufacturing process to make chips for Elon Musk’s Terafab project, an advanced AI chip complex he has envisioned in Austin.

The Trump administration ​has also been trying to ​drum up business for ⁠Intel, an official said last month.

“Beyond the standard need to diversify, Google and Nvidia are even more motivated than usual to work with Intel. Supporting Intel ​supports U.S.-based manufacturing, which is important for the relationship with the U.S. ​administration,” said D.A. ⁠Davidson analyst Gil Luria.

Last month, the Wall Street Journal reported that Intel has reached a preliminary deal to make some chips for Apple devices following intensive talks for more than a year.

Google, meanwhile, has been pushing ⁠to make ​its in-house AI chips a viable alternative to Nvidia’s dominant ​GPUs, with sales of its tensor processing units becoming a growth driver for the company’s cloud revenue. Reuters