Google taps Intel to build 3 million AI chips as TSMC strains
Alphabet's Google (NASDAQ:GOOGL) has placed an order with Intel (NASDAQ:INTC) to manufacture more than 3 million of its custom artificial intelligence processors in 2028, according to a report from The Information cited by Reuters.
The blockbuster arrangement triggered a sharp rally in Intel shares, which climbed more than 13% on the news.
The high-volume order followed months of rigorous qualification testing, during which Google evaluated Intel's proprietary advanced chip packaging technology, Bloomberg reported.
The partnership comes at a critical juncture for the broader technology sector; Taiwan Semiconductor Manufacturing (NYSE:TSM), which fabricates the vast majority of the world’s leading-edge AI silicon, has been unable to expand capacity quickly enough to meet runaway global demand.
Facing prolonged supply constraints at TSMC, a growing list of prominent AI chip designers are actively seeking out Intel Foundry to fill manufacturing gaps.
Other mega-cap technology firms are exploring alternative production routes through Intel.
Nvidia (NASDAQ:NVDA) is currently assessing whether Intel’s advanced packaging can handle the manufacturing specifications for a new processor designed to fuse four distinct graphics chips into a single unified unit. While the evaluation remains underway, no formal production order has been placed by Nvidia yet.
For Google, the manufacturing deal reflects the rapidly expanding footprint of its proprietary Tensor Processing Unit (TPU) hardware line.
Earlier this year at its Cloud Next conference, Google unveiled its eighth-generation TPU architecture, separating training and inference workloads into entirely distinct processors for the first time.
The company’s custom hardware has secured a robust lineup of anchor customers, including Citadel Securities, all 17 national laboratories within the U.S. Department of Energy system, and AI startup Anthropic, which has committed to utilizing multiple gigawatts of Google's TPU capacity.
Additionally, Google reached a multiyear agreement in February to provide Meta Platforms with access to its TPU infrastructure.
The contract represents an essential operational milestone for Intel as it attempts to aggressively rebuild its third-party contract chip manufacturing unit.
Under the leadership of Chief Executive Officer Lip-Bu Tan, the company has worked to erase ground lost to TSMC following years of execution and management missteps.
