Microsoft and Intel forge custom chip deal valued at over $15 billion

The agreement, announced at the Intel Foundry event, provides for Intel to produce custom-designed chips exclusively for Microsoft's needs.

While the specific applications of these chips remain undisclosed, Microsoft's ongoing efforts in processor and AI accelerator development hint at their versatile potential.

The chips will be crafted using Intel's cutting-edge 18A process, a pivotal component of Intel's strategic roadmap under CEO Pat Gelsinger's leadership. This move underscores Intel's ambition to reclaim its leadership position in chip manufacturing, with Microsoft serving as a flagship customer for this endeavor.

Intel's approach mirrors successful strategies adopted by competitors like TSMC, which has fostered lucrative partnerships with industry giants such as Apple, Qualcomm, and AMD.

However, Intel faces challenges, including delays in its $20 billion Ohio chip plant, now scheduled for 2026 instead of the initial target of 2025. This setback is attributed to sluggish market conditions and delays in government grants.