Why is Alphabet shifting away from TSMC?

Due to capacity constraints at TSMC.

Tensor Processing Units (TPUs) are Alphabet's custom processors designed to accelerate AI tasks.

Alphabet Taps Intel to Manufacture Custom AI Chips by 2028

Q: Is this the first time Alphabet has contracted Intel for manufacturing?

Yes, this is the first time Alphabet will rely on Intel as a contract manufacturer for its proprietary AI hardware.

Alphabet announced plans to use Intel to manufacture over 3 million custom AI chips by 2028, reducing its reliance on TSMC and reshaping the global semiconductor supply chain.

June 8, 2026

2 min read

Source: Simply Wall St.

Key Numbers

chip volume

3 million+

year

2028

Alphabet Inc. (NASDAQ:GOOGL) announced plans to use Intel Corporation (NASDAQ:INTC) to manufacture over 3 million custom AI chips by 2028, in a move that reshapes the global semiconductor supply chain.

Details

The agreement involves shifting a portion of Alphabet's Tensor Processing Unit (TPU) production away from TSMC due to capacity constraints. This marks the first time Alphabet will rely on Intel as a contract manufacturer for its proprietary AI hardware.

Context

The deal comes amid rising competition in AI chip sourcing, as major tech companies seek to diversify manufacturing sources to avoid bottlenecks. It also boosts Intel's position in the contract manufacturing market, currently dominated by TSMC.

What It Means for Investors

The agreement represents a strategic shift for Alphabet toward reducing dependency on a single supplier, potentially improving supply chain resilience. For Intel, securing a major client like Alphabet strengthens its credibility in the contract manufacturing space. However, financial details of the deal have not been disclosed.

Frequently Asked Questions

Over 3 million custom AI chips by 2028.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.