Intel will produce the specialized "AI fabric chip" for Amazon, using its 18A manufacturing process, which is the company’s most advanced chip manufacturing technology.

Intel’s partnership with AWS is part of the chipmaker’s attempt to play catch-up. The new deal, along with a $3 billion grant from the US government to boost domestic chip making and make chips for the US military, “demonstrates the continued progress we are making to build a world-class foundry business,” Intel said in the statement.

The two companies will co-invest in making "fabric chips" that will be built in a new factory under construction outside Columbus, Ohio.