SANTA CLARA, June 8 — Alphabet's Google has placed an order with Intel to manufacture more than three million tensor processing units in 2028, The Information reported on Monday, citing people with direct knowledge of the discussions.
NVIDIA is also evaluating whether Intel's technology can be used to build a processor that combines four graphics chips into a single unit, although it has not yet placed an order with the company.
Intel's shares rose more than nine per cent in early trading, set to add to the nearly 169 per cent gain so far this year, on the back of signs of steady turnaround progress under chief executive officer Lip-Bu Tan.
Intel declined to comment on the report, while Alphabet and Nvidia did not immediately respond to requests for comment.
Reuters could not independently verify the report.
The potential order for Google's in-house artificial intelligence (AI) chips would bolster Intel's contract chip manufacturing business and comes as the company tries to claw back the chipmaking crown that it lost to Taiwan's TSMC following years of management blunders.
Soaring chip demand from the AI boom has left TSMC struggling to meet demand. That capacity crunch has prompted several major AI chip design companies to turn to Intel.
eMarketer technology analyst Jacob Bourne said that the news is "evidence that AI's biggest players are racing to diversify a supply chain still heavily concentrated in TSMC".
Since Tan took charge, Intel has secured billions of dollars in investment 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 AI chip complex he has envisioned in Austin, Texas.
Last month, an official said that the Trump administration has also been trying to drum up business for Intel.
"Beyond the standard need to diversify, Google and Nvidia are even more motivated than usual to work with Intel. Supporting Intel supports United States (US)-based manufacturing, which is important for the relationship with the US administration," said D.A. Davidson analyst Gil Luria.
Last month, the Wall Street Journal reported that Intel has reached a preliminary deal to manufacture some chips for Apple devices following more than a year of intensive talks.
Meanwhile, Google has been pushing to make its in-house AI 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.
