Intel Explores AMD Chip Manufacturing Partnership: A Potential Foundry Deal in Early Discussion Stages
In a surprising turn of events, long-time rivals Intel and AMD are reportedly in preliminary discussions regarding a potential chip manufacturing partnership. According to a report by Semafor, Intel is exploring the possibility of AMD utilizing its foundry services to produce chips. This development could signal a significant shift in the semiconductor landscape and carries substantial implications for both companies and the broader industry.
Intel Foundry Services (IFS) Seeks a Major Win
For Intel, a manufacturing agreement with AMD would represent a major victory for its Intel Foundry Services (IFS) division. IFS has been actively pursuing large-scale customers to establish itself as a reliable and competitive provider of semiconductor manufacturing services. Securing a prominent client like AMD would enable Intel Foundry to invest further in advancing its manufacturing capabilities and demonstrate its ability to handle the production needs of other major semiconductor firms. Intel has been on a charm offensive seeking customers and investors to back its push to establish itself as a contract chipmaker. In recent weeks, it has lined up financial support from the U.S. government, Nvidia, and SoftBank.
AMD Considers Diversifying Manufacturing
AMD currently relies on Taiwan Semiconductor Manufacturing Company (TSMC) for the majority of its chip production. A partnership with Intel would provide AMD with an alternative manufacturing source, potentially mitigating supply chain risks and geopolitical uncertainties. The U.S. government has expressed its desire to have at least half of all chips bound for American markets manufactured domestically. With most of AMD's volume still built in Taiwan, utilizing Intel's foundry services could help AMD align with these objectives.
Strategic Implications and Market Reaction
The potential partnership between Intel and AMD has significant strategic implications. It would represent a notable shift in AMD's direction, considering its long-standing reliance on TSMC. Moreover, it would indicate AMD's willingness to entrust manufacturing to its primary competitor in the x86 processor market, where the two companies vie for dominance in PC and server chips.
The news of the potential partnership has already had a noticeable impact on the stock market. Following the report, Intel shares reportedly rose by 7%, while AMD stock climbed more than 1%. This surge reflects investor confidence in Intel's turnaround efforts and the potential benefits of a successful foundry business. Intel shares have surged nearly 77% year-to-date in 2025 as investor confidence in the chipmaker strengthens.
Challenges and Considerations
Despite the potential benefits, several challenges and considerations remain. It is unclear what scope AMD’s manufacturing commitment with Intel would be. AMD's most advanced processors are built on TSMC's leading-edge nodes, which Intel can't yet match. This makes it unlikely AMD would hand over production of its flagship products to its long-time rival. Technical feasibility and ensuring that Intel's manufacturing processes meet AMD's specific requirements will also be crucial.
AMD has responded to the report, calling them rumours. An AMD spokesperson stated, "AMD does not comment on rumor or speculation". Intel declined to comment on the report.
Looking Ahead
The discussions between Intel and AMD are still in the early stages, and there is no guarantee that a deal will be reached. However, the very fact that these talks are taking place highlights the evolving dynamics of the semiconductor industry and the increasing importance of strategic partnerships. If successful, this collaboration could reshape the competitive landscape and accelerate innovation in chip manufacturing.
