Intel shares surged in early trading after a report indicated that two leading AI chip developers have engaged Intel in talks about using the company as a backup fabricator for advanced processors.
The report, which cited four people with direct knowledge of the conversations, said the discussions involved Intel and major AI chip design companies as Taiwan Semiconductor Manufacturing Co. confronts limits on its capacity amid booming demand for AI chips.
According to the report, Google has placed an order with Intel to manufacture more than 3 million Tensor Processing Units in 2028 following months of testing Intel's advanced packaging capabilities. Tensor Processing Units are Google's in-house chips used to train and run AI models, and an outside estimate cited in the report places Google's total TPU production at more than 6 million units across 2027 and 2028.
The report added that Nvidia has not yet placed a production order, but is conducting tests to determine whether Intel's technology can produce a processor that integrates four graphics chips into a single unit. Those efforts are linked to Nvidia's Feynman series GPU architecture, which is scheduled for release in 2028, according to the same sources.
Pressure on foundry capacity was a central element of the report. It said TSMC's manufacturing capacity is strained by the surge in AI chip demand, with bottlenecks concentrated in leading-edge wafer lines and in advanced packaging production lines. The capacity constraints are the backdrop to why Intel is being considered as a potential supplementary manufacturer.
In addition, the report noted that Nvidia is running early trials on 18A, described as Intel's most advanced manufacturing process, via multiproject wafer runs. Those trials are exploratory and, according to the report, do not represent firm production orders.
Market reaction reflected the new information. Intel's stock moved sharply higher in morning trading after the report was published, while the article referenced market data showing movement in related semiconductor stocks.
Context and implications
The developments outlined in the report center on how capacity shortages at major contract foundries are prompting chip designers to examine alternative manufacturing partners. The steps reported - a large order from Google and technological testing by Nvidia - underscore a potential reconfiguration of supply relationships for high-end AI processors, depending on how discussions and tests progress.