GoKawiilRumor mill: Intel's effort to regain its footing in advanced chip manufacturing is drawing fresh interest, as some of the biggest players in AI look beyond their traditional suppliers. Alphabet's Google has reportedly ordered more than three million tensor processing units from Intel for production in 2028. If the order materializes, it would give Intel's contract manufacturing arm a significant boost as the company works to regain its standing in leading-edge chip production.
The reported deal comes amid mounting strain on the global chip supply chain, reports The Information, which cited people with direct knowledge of the talks. TSMC, long the dominant player in producing cutting-edge chips, has struggled to keep up with demand fueled by the rapid expansion of artificial intelligence. That imbalance has pushed major AI chip designers to look at other manufacturers, including Intel, rather than relying solely on TSMC.
Google's Tensor Processing Units are central to that shift. The company has been steadily developing its in-house chips to reduce reliance on Nvidia's GPUs, while also using them to strengthen its cloud offerings. Securing enough manufacturing capacity for future generations has become increasingly important as AI workloads grow more complex and compute-intensive.
Nvidia itself appears to be testing the waters with Intel. The company is evaluating whether Intel's technology could support a design that combines four graphics chips into a single processor, according to the report, though it has not placed an order. Even so, Nvidia's consideration of Intel shows how tight high-end chip capacity has become.
Intel's strategy under CEO Lip-Bu Tan has focused heavily on turning its manufacturing arm into a competitive alternative to TSMC. The company has rolled out an ambitious roadmap that includes next-generation process technologies like 14A, while actively courting large external customers.
There are signs that the approach is starting to resonate. Intel has drawn investment from the US government and SoftBank and secured Tesla as a customer for its 14A process, which will be used for chips tied to Elon Musk's planned Terafab AI facility in Austin. A separate report last month said Intel had also reached a preliminary agreement to manufacture chips for Apple after more than a year of talks.
Government support has also played a role. "Beyond the standard need to diversify, Google and Nvidia are even more motivated than usual to work with Intel. Supporting Intel supports US-based manufacturing, which is important for the relationship with the US administration," D.A. Davidson analyst Gil Luria told Reuters.
Investors reacted quickly to the latest developments. Intel's shares rose more than 9% in early trading following the report, adding to a surge that has already seen the stock climb nearly 169% this year.
Intel declined to comment on the reported Google order, while Alphabet and Nvidia did not respond to requests for comment. Reuters said it could not independently verify the report.
As demand for AI continues to strain existing supply chains, companies that once relied heavily on a single manufacturing partner are starting to hedge their bets. For Intel, that shift could open the door to a long-awaited comeback – if it can deliver on the technology.