Intel Shares Surge as Amazon AI Chip Deal Announced

Shares of Intel surged nearly 7% in premarket trading Tuesday following the announcement of a pivotal partnership with Amazon Web Services (AWS). Intel's CEO, Pat Gelsinger, revealed that the chipmaker would develop a customized artificial intelligence chip for AWS, aiming to boost its foundry business. The division will become a subsidiary, and that structure "will unlock important benefits," Gelsinger said.

In a message to employees, Gelsinger detailed the advantages of the subsidiary structure, stating it "provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel." He also stressed the flexibility this structure offers in optimizing capital and enhancing shareholder value. Analyst Harlan Sur of JP Morgan termed the move as a logical progression that could lead to a spin-off in the coming years. An independent board is set to oversee the new subsidiary.

Additionally, Gelsinger gave an update on Intel's cost-cutting measures, noting progress towards reducing its workforce by about 15,000 by year-end. The reduction is being achieved through voluntary early retirement and separation offerings. Despite being halfway to that target, Gelsinger acknowledged that "difficult decisions" remain, with affected employees to be informed by mid-October. Intel plans to cut or exit two-thirds of its global real estate holdings by the end of the year. These measures are part of the strategy to invigorate Intel's business operations. (This story was generated by Newser's AI chatbot. Source: the AP)