AMD Explores Sending Some Production to Intel Foundry

Intel and Advanced Micro Devices are in early, exploratory talks that could see AMD send some chip production to Intel Foundry, people familiar with the discussions said, a potential shift that has drawn market attention and underscored the industry’s search for additional U.S. manufacturing capacity. The talks are not finalized and could take months, with technical, commercial and regulatory hurdles remaining.

The discussions come as Intel seeks external customers for its Intel Foundry Services unit, which has struggled to reach volume on its newest process nodes and has been operating with quarterly losses. Intel has delayed wide production on its 18A and 14A nodes, and company officials have said those nodes must attract outside demand or risk being deprioritized. AMD, which has long leaned on Taiwan Semiconductor Manufacturing Co. for advanced wafers, is reported to be weighing alternatives to reduce dependence on a single supplier and to shorten supply chains for U.S. markets.

Market reactions to the reports were immediate but mixed. Intel shares rose after initial reports of the talks, gaining several percentage points intraday on one trading session and about 3.5 percent...