SANTA CLARA, Calif. & SEATTLE - Intel Corporation (NASDAQ: NASDAQ:INTC) and Amazon Web Services (AWS), a subsidiary of Amazon.com (NASDAQ: NASDAQ:AMZN), announced today a significant expansion of their strategic collaboration with a multi-year, multi-billion-dollar investment in custom chip designs. This partnership is aimed at enhancing the performance of artificial intelligence (AI) applications and supporting a wide range of customer workloads.
Intel will develop an AI fabric chip for AWS using its most advanced process node, Intel 18A, and a custom Xeon 6 chip on Intel 3. The AI fabric chip is expected to drive innovation and support the growth of both Intel and AWS businesses, while also fostering a sustainable domestic AI supply chain.
Intel's CEO, Pat Gelsinger, highlighted the strength of Intel's process technology and the potential for this collaboration to deliver differentiated solutions. Matt Garman, CEO at AWS, emphasized their commitment to delivering powerful cloud infrastructure and unlocking new AI capabilities for their customers.
The collaboration also aims to accelerate semiconductor manufacturing in the United States, with Intel continuing its commitment to build leading-edge manufacturing facilities in New Albany, Ohio. AWS plans to invest $7.8 billion in expanding its data center operations in Central Ohio, adding to its previous investment of $10.3 billion in the state since 2015.
Ohio Governor Mike DeWine praised the development for U.S.-based manufacturing and for solidifying Ohio as a leader in AI. The partnership between Intel and AWS reflects an 18-year relationship dedicated to providing organizations with the tools to deploy workloads in the cloud efficiently.
Looking ahead, Intel and AWS plan to explore additional custom designs based on Intel 18A and future process nodes, including Intel 18AP and Intel 14A, which are expected to be produced in Intel's Ohio facilities.
This announcement is based on a press release statement and contains forward-looking statements that involve risks and uncertainties, including the possibility that the collaboration may not yield the expected benefits or may face delays or increased costs. The companies caution against placing undue reliance on these forward-looking statements, which are subject to change based on new information or developments.
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The implicated smartphone makers, including industry leaders Samsung (KS:005930) and Xiaomi (OTC:XIACF), along with other smartphone manufacturers, are now facing increased scrutiny and potential legal challenges. The CCI reports specifically named these companies as having engaged in the controversial practice of exclusive phone launches in collaboration with Amazon and Flipkart.
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InvestingPro Insights
As Intel Corporation (NASDAQ: INTC) and Amazon Web Services (AWS) deepen their strategic partnership, it's pertinent to look at Amazon.com's (NASDAQ: AMZN) financial health and market standing to understand the potential impact of this collaboration. According to InvestingPro data, Amazon boasts a massive market capitalization of $1.94 trillion, underlining its position as a tech behemoth.
InvestingPro Tips for Amazon highlight the company's significant role in the Broadline Retail industry and its high earnings multiple, which reflects investor confidence in its growth trajectory. Despite trading at a high Price / Book multiple of 8.22, Amazon's profitability over the last twelve months and analysts' predictions for continued profitability this year suggest a strong financial foundation to support such ambitious collaborations.
The real-time metrics show that Amazon's revenue growth remains robust, with a 12.32% increase over the last twelve months as of Q2 2024. This, coupled with a substantial gross profit margin of 48.04%, demonstrates Amazon's ability to generate earnings efficiently. Furthermore, Amazon's operating income margin stands at 9.0%, indicating solid profitability from its core operations.
These financial metrics are particularly relevant as Amazon's partnership with Intel is set to enhance AI capabilities, a move that could further drive growth and profitability. With Intel's focus on semiconductor manufacturing and Amazon's planned investment in data centers, both companies appear well-positioned to capitalize on the burgeoning AI market.
For those interested in more detailed analysis, there are additional InvestingPro Tips for Amazon available at https://www.investing.com/pro/AMZN, providing a deeper dive into the company's financials and market performance.
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