Alphabet plans to use Intel as a contract manufacturer to produce over 3 million Tensor Processing Units (custom AI chips designed by Alphabet) in 2028. This marks the first time Alphabet will rely on Intel for its proprietary AI hardware manufacturing.
The shift diverts a portion of Alphabet's chip production away from TSMC due to capacity constraints. The move aims to lock in manufacturing capacity and reduce reliance on a single foundry supplier.
For investors, the agreement underlines how critical secure chip capacity has become for Alphabet's AI and cloud ambitions. The decision to diversify manufacturing partners could influence long-term cost structure, supply resilience, and competitive positioning in AI infrastructure.
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