Alphabet’s Google has placed an order with Intel to manufacture more than three million tensor processing units in 2028, according to people with direct knowledge of the discussions. Nvidia is also evaluating whether Intel’s technology can be used to make a processor that combines four graphics chips into a single unit, although it has not placed an order with the company yet. Intel declined to comment, while Alphabet and Nvidia did not immediately respond to requests for comment.
Intel’s shares rose more than 9% in early trading, set to add to the nearly 169% gain so far this year, on signs of steady turnaround progress under CEO Lip-Bu Tan. The potential order for Google’s in-house Artificial Intelligence chips would bolster Intel’s contract chip manufacturing business and comes as the company tries to claw back its chipmaking crown that it lost to Taiwan’s TSMC following years of management blunders. Soaring chip demand from the Artificial Intelligence boom has left TSMC struggling to bring in adequate supply, prompting several major Artificial Intelligence chip design companies to turn to Intel.
The news is evidence that Artificial Intelligence’s biggest players are racing to diversify a supply chain still heavily concentrated in TSMC, according to Jacob Bourne, technology analyst at eMarketer. Since Tan took charge, Intel has secured billions of dollars of investments from the Trump administration, Nvidia and SoftBank. It also landed Tesla as the first major customer for its next-generation 14A manufacturing process to make chips for Elon Musk’s Terafab project, an advanced Artificial Intelligence chip complex he has envisioned in Austin.
The Trump administration has also been trying to drum up business for Intel, an official said last month. D.A. Davidson analyst Gil Luria said Google and Nvidia are especially motivated to work with Intel because supporting the company also supports U.S.-based manufacturing, which matters for relations with the U.S. administration. Google has been pushing to make its in-house Artificial Intelligence chips a viable alternative to Nvidia’s dominant GPUs, with sales of its tensor processing units becoming a growth driver for the company’s cloud revenue.
