Intel surged over 7%, reports indicate negotiations to add AMD as a new foundry client

Intel is reportedly in talks with competitor AMD to reach a foundry cooperation agreement, raising hopes for a revival of Intel's foundry business.

On October 1st, Eastern Time, media outlets cited sources familiar with the matter stating that Intel is negotiating with AMD regarding wafer foundry business cooperation, with both companies discussing the possibility of AMD using Intel's factories to produce chips. The negotiations are still in the early stages and may ultimately not result in an agreement.

If the news is true and an agreement is reached, AMD would become a new important customer for Intel's foundry business. AMD currently relies primarily on TSMC for chip production, while Intel is seeking major customers to support the development of its foundry business. It is still unclear how much manufacturing business AMD would transfer to Intel, and it is uncertain whether direct investment would be involved.

Spokespeople for both Intel and AMD declined to comment on the news. An AMD spokesperson stated that the company "does not comment on rumors or speculation." However, stock market investors quickly responded positively.

After the news broke, Intel's stock price surged during midday trading, with the intraday increase expanding from less than 4.5% to over 6.8% in about ten minutes, before narrowing to within 6%, and then expanding again to close up 7.1%. AMD closed up over 1.3%.

Intel's Foundry Business Seeks Breakthrough

Intel's foundry business is striving to attract major customers to support its manufacturing technology investments and business development. Over the past seven weeks, Intel has received investments and support from multiple parties, including SoftBank, the Trump administration, and NVIDIA, and there have been reports of negotiations with companies like Apple for cooperation.

In late August, shortly after SoftBank announced a $2 billion investment in Intel, U.S. President Trump stated that his administration acquired a 10% stake in Intel. According to the agreement, based on the $2.2 billion funding Intel has received from the U.S. CHIPS Act, the U.S. government will make an additional $8.9 billion equity investment in Intel, purchasing 433.3 million shares of Intel stock, bringing the total investment to $11.1 billion.

Nearly two weeks ago, NVIDIA announced a $5 billion investment in Intel to jointly develop PC and data center chips. Last Wednesday, media reported that Intel had approached Apple seeking investment as part of its recovery plan, and both sides discussed the possibility of strengthening cooperation. Intel has also reached out to other companies to explore potential investment and cooperation relationships Intel once dominated the laptop chip market and still holds a significant market share. However, the rapid development of the AI chip market led by NVIDIA has caught Intel off guard. Intel is seeking to regain its market position through foundry services and new partnerships, actively pursuing major clients. From this perspective, winning AMD as a client would be a major boost for Intel.

Analysts believe that the addition of major clients will enable Intel's foundry business to invest in manufacturing technology with greater confidence and send a signal to other chip companies that Intel is capable of handling foundry services. Currently, Intel's chip factory technology is considered less advanced than TSMC's, but under the policy backdrop of the Trump administration promoting U.S. chip manufacturing, large American companies are shifting some production to Intel's domestic foundries.

The Significant Meaning of Competitor Collaboration

AMD's choice to collaborate with Intel will have significant symbolic meaning, indicating AMD's confidence in entrusting its manufacturing business to a major competitor. The two companies directly compete in the x86 architecture PC and server chip markets, and this potential collaboration would break the traditional competitive landscape.

AMD's chip sales business in China was affected by export restrictions earlier this year, while the U.S. government has recently relaxed related export restrictions. Against this backdrop, AMD has reason to maintain a good relationship with the White House, and choosing Intel as a domestic foundry partner aligns with this strategic consideration.

Last Friday, reports indicated that the Trump administration is considering implementing a new policy requiring chip companies to maintain a 1:1 ratio between their production in the U.S. and the number of chips imported from overseas by their clients. Companies that fail to maintain this ratio will face tariffs. This policy highlights the main direction of the Trump administration's efforts to stimulate U.S. manufacturing. In this context, AMD's foundry choice appears reasonable.

However, Intel currently lacks the technological capability to produce AMD's most advanced and profitable chips. Previous reports indicated that AMD had evaluated Intel's manufacturing technology. Even if a collaboration is reached, it is expected that the initial focus will be on producing chips with lower technical requirements, rather than AMD's core high-end products