3 days Ago By Yahoo Finance Video
Intel ( ) and Amazon Web Services ( ) a co-investment in custom chip designs in a multi-billion, multi-year strategic collaboration. Creative Strategies CEO and principal analyst Ben Bajarin joins Asking for a Trend to discuss the news. Bajarin explains that Intel has won a large customer in AWS: "There's positive momentum there in terms of getting foundry wins.
" He believes that Intel is ultimately setting the stage to split into two companies: Intel and an its foundry segment He believes that having an Intel foundry subsidiary is "essentially as close as you can get to putting the right kind of walls and guardrails around Intel foundry so that other customers can come in and feel comfortable knowing that they'll have capacity wafer allocation." He highlights that the services side of the business needs to be its own entity to attract wafer-scale customers. For more expert insight and the latest market action, click to watch this full episode of Asking for a Trend.
Video Transcript Intel and Amazon web services announcing a co investments in custom chip designs under a multiyear multibillion dollar framework. This is a significant expansion of the two companies long standing strategic collaboration and joining us now to talk about all this is creative strategy, CEO and principal analyst, Ben, Ben. Ben, always good to see you.
So let's get right to this news, Ben. So Intel is gonna be making a custom A I chip for Amazon. Give me your reaction to that headline Ben.
How, how important is this in your opinion for the company's manufacturing business? Yeah, I mean, I think the big win is just a, a large customer obviously aws by name Intel's also mentioned that Microsoft will be doing some custom chips with them as well. So I think there's positive momentum there in terms of getting foundry wins, particularly in this case for 18 A. Um I think that's been one of the big uh nodes where both Pat Gelsinger, CEO of Intel and many others have said, you know, this is the first kind of big scale commercial node that they want to push and it sounds like, you know, they have a number of customers uh, already announced as well as it appears that there's a lot of interest as well, uh as customers looking for that.
So it's a good win for Foundry. I think it sets the stage for more customers. Um, but a good, solid, solid step one for adding more customers and getting more revenue to intel foundry as they look to make that sustainable and profitable on its own.
I'm just looking Ben at the reaction right now in the after hours. I mean, this stock is surging about 8%. Um Does that move, make sense to you, Ben? Is that justified in your opinion? So I think that's more from a uh a separate note that Pat Gelsinger put out to employees and a road map on from one updating them on the board conversations that happened uh last week, I believe.
And then um that there are some plans which, which includes a uh and setting up Intel Foundry as its own internal subsidiary and why that's important. And this is what I think the news is, is, is positive too in some of the stock reactions is it's not a spin out, but it's essentially as close as you can get to putting the the right kind of walls and guardrails around Intel Foundry so that other customers can come in and feel comfortable knowing that they'll have capacity um way for allocation. And again that there is a separation of Intel Foundry from Intel's Fabulous product group.
And I think that's been one of the big, um question marks for, for everybody analyzing this is the services side of that business and it needs to be operated ifs needs to be operated really as its own entity in order to attract many of these way for scale customers for a a and beyond. And this is one step toward inevitably where I think they'll, you know, have it Intel foundry, stand on its own. But I think the reaction is to that, that independent, formal, independent unit of ifs now f uh being functional within broader Intel uh Intel's business.
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