Google $GOOGL has placed an order with Intel $INTC to manufacture more than 3 million of its tensor processing units in 2028, according Reuters, citing a report from The Information. Intel stock rose more than 13% on the news.
The order comes as TSMC struggles to keep up with AI chip demand, prompting major tech companies to seek alternative manufacturers
Matthias Balk/picture alliance via Getty Images
Google $GOOGL has placed an order with Intel $INTC to manufacture more than 3 million of its tensor processing units in 2028, according Reuters, citing a report from The Information. Intel stock rose more than 13% on the news.
The order follows months during which Google tested Intel's chip packaging technology, according to Bloomberg. TSMC $TSM, which manufactures the majority of leading-edge AI chips, has been unable to keep pace with surging demand, and faced with that shortage, a number of prominent AI chip designers have begun looking to Intel to fill the gap.
A processor that fuses four graphics chips into one unit is under consideration by Nvidia $NVDA, which is assessing whether Intel's technology could handle the manufacturing — but no order has been placed.
Google's TPUs have become an increasingly significant product line. The company introduced two new AI chips at its Cloud Next conference earlier this year, separating training and inference into distinct processors for the first time across its eighth generation of TPUs. Customers using the chips include Citadel Securities, all 17 national laboratories in the U.S. Energy Department system, and Anthropic, which has pledged to draw on multiple gigawatts of TPU capacity from Google. A multiyear agreement giving Meta $META access to Google's TPUs was also reached in February.
For Intel, the Google order represents a concrete step in its effort to rebuild its contract chip manufacturing business. The company lost ground to TSMC following years of management difficulties and has been working under CEO Lip-Bu Tan to reverse that trajectory. Intel has secured investments from Nvidia and SoftBank, and last month The Wall Street Journal reported that Intel reached a preliminary agreement to make some chips for Apple $AAPL devices.
Intel has also secured Tesla $TSLA as a customer for its 14A process node, which will be used to fabricate chips destined for the Terafab facility Elon Musk has been developing in Austin.
Advanced chipmaking remains an area where Intel cannot yet match TSMC, meaning packaging work represents the more immediate opening for the company, according to The Next Web.
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