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The intelligence giant chip got a contract from the Department of Defense to manufacture advanced microchips through its contract manufacturing unit. It’s a big win in a year of the company’s investment attempts.
ArisMessinis / AFP via Getty Images
Intel
said Monday it had landed a U.S. Department of Defense pact for an undisclosed sum to manufacture advanced microchips through its contract manufacturing unit for the first phase of a larger program.
Shares of Intel (ticker: INTC) gained 2.4% to close at $ 53.23 in Monday’s regular session, as the
PHLX Semiconductor Index
(SOX) advanced 2.6%.
Intel’s contract is part of a U.S. Department of Defense effort to use U.S.-based chip makers to make necessary chips for critical systems, which has had intense interest amid a global chip shortage. The drought has exposed the confidence of the United States and other countries in a handful of chip makers that power everything from personal computers to various vehicle components.
According to Intel, the company’s foundry services unit will join companies such as
International business machines
(IBM),
Synopsis
(SNPS) and others, in the Commercial Rapid Assure Microelectronics Prototypes program, known as RAMP-C. The goal of the program is to support U.S. chip makers to have an adequate supply of parts for critical Department of Defense systems.
Intel CEO Pat Gelsinger said Intel is the only American company that can design and manufacture the most advanced processors. “One of the deepest lessons from last year is the strategic importance of semiconductors and the value to the United States of having a strong national semiconductor industry,” Gelsinger said in a prepared statement.
Obtaining the Department of Defense contract marks an early victory for Intel’s startup services business. Intel launched the new initiative earlier this year as part of its broader commitment to addressing some of the manufacturing issues that have allowed rivals such as
Taiwan semiconductor manufacturing
(TSM) to usurp their unique domain. Intel’s plans include $ 20 billion to build two new factories in Arizona.
Reports have surfaced in recent weeks that Intel is in talks with U.S.-based chip maker GlobalFoundries for a $ 30 billion acquisition, a deal that would boost Intel’s contract chip business in several ways. However, Reuters reported that the owners of the company, Abu Dhabi’s government investment branch, Mubadala Investment, are pursuing plans to make the company public.
Write to Max A. Cherney at [email protected]