Alphabet Inc. Class C (GOOGL.US) TPU Ignites Industry Trends! Intel Corporation (INTC.US) May Become the "Hidden Winner" Behind It

Alphabet Inc. Class C (GOOGL.US) is attracting industry attention with the recent launch of its latest seventh-generation Tensor Processing Unit (TPU) "Ironwood" in April. This is mainly due to the successful release of Gemini 3 last week - a model trained entirely on the Ironwood TPUv7 and speculation that Meta (META.US) is considering adopting the newly launched TPU instances this month. The success of Alphabet Inc. Class C's in-house chips is drawing increasing attention to the expanding role of custom ASICs in the era of AI computing. While Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) is currently the main manufacturing partner for Alphabet Inc. Class C's TPUs, the growing momentum of these processors (and custom AI ASICs in general) may also benefit Intel Corporation's foundry services and product department roadmap. This is expected to strengthen Intel Corporation's broader prospects for recovery and could be a breakthrough catalyst for the stock. Overview of Alphabet Inc. Class C's TPU Alphabet Inc. Class C has been developing TPUs for about ten years, and its latest generation Ironwood TPU is gaining more and more attention, becoming a potential alternative to NVIDIA Corporation's (NVDA.US) GPUs in the ongoing transition to AI computing. Specifically, the seventh-generation Ironwood TPU offers a 2x performance/efficiency improvement compared to its predecessor, the sixth-generation Trillium. In addition, the Ironwood TPU was used to train Gemini 3 - currently the world's leading multimodal and reasoning model, with highly competitive performance in mainstream AI tasks. The combination of efficiency and performance highlights the growing competitiveness of TPUs in AI computing compared to NVIDIA Corporation's current leading position. Recent industry interest further confirms the growing momentum of Alphabet Inc. Class C's TPUs. This includes market speculation that Meta is considering spending billions of dollars to purchase Alphabet Inc. Class C's TPUs starting from 2027. Previously, Anthropic recently expanded its partnership with Alphabet Inc. Class C, committing to using up to a million TPUs starting from 2026. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is currently the main manufacturer for Alphabet Inc. Class C's TPUs and its latest ARM (ARM.US) architecture Axion CPUs. It is widely speculated that the latest generation Ironwood TPU uses Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's N3 process. As demand for Alphabet Inc. Class C's TPU instances rapidly increases, the company may need additional manufacturing capacity in the future to mitigate the risk of supply shortages. This is particularly important as most of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's capacity has already been allocated, with NVIDIA Corporation being one of its major customers on advanced nodes. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR recently disclosed that its capacity in advanced nodes (7nm and below) is "still about three times less than the expected demand from major customers." Meanwhile, NVIDIA Corporation continues to request additional capacity from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, which expects annual sales to reach new highs in the future due to strong demand. Opportunities for Intel Corporation's foundry services With external interest in TPUs accelerating, this trend could drive Alphabet Inc. Class C to further diversify its manufacturing layout to avoid potential supply bottlenecks and create potential opportunities for Intel Corporation's foundry services. There have been speculations that, considering the ongoing tightness in Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's CoWoS advanced packaging capacity, Alphabet Inc. Class C is considering adopting Intel Corporation's advanced packaging technology for the next generation TPUv9. Specifically, due to ongoing constraints in CoWoS packaging capacity, Intel Corporation's Foveros and embedded multi-chip interconnect bridge (EMIB) advanced packaging technologies have become favorable alternatives since last year. Intel Corporation's success in advanced packaging through its foundry services is evident from the profitability of this business. The company is increasingly focused on ensuring that its packaging technology is "designed to meet customer needs," further affirming the increase in its adoption rate. This is also in line with the foundry sector's continuous expansion of collaborations with IP and EDA partners to seamlessly integrate customer designs with their manufacturing and advanced packaging processes. Intel Corporation's extensive capacity in the United States may also align with Alphabet Inc. Class C's need for geographic and capacity diversification. This is consistent with similar practices adopted by other peers also involved in custom chip development. Tesla, Inc. (TSLA.US) recently reached a $16.5 billion agreement with Samsung to produce its next-generation AI6 processors at a new fab in Taylor, Texas. This diversifies Tesla, Inc.'s current supply chain away from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in Arizona and further expands its manufacturing layout in the U.S. to mitigate the impact of tariffs. Additionally, it has been reported that Intel Corporation's foundry services have secured a contract to manufacture Microsoft Corporation's (MSFT.US) next-generation custom "Maia 2" AI processor at the 18A process node in the United States. This aligns with Intel Corporation's disclosure last year that Microsoft Corporation "has selected a chip design planned for production using Intel Corporation's 18A process." The prospects of collaboration between Alphabet Inc. Class C and Intel Corporation's foundry services have been further strengthened by Intel Corporation's current CEO, Pat Gelsinger, continuously prioritizing customer needs when developing future product roadmaps for the foundry business. Gelsinger stated: "Building world-class foundries has been a long-term effort based on trust. As a foundry, we need to ensure that our processes can be easily used by a variety of customers with unique product construction methods. When customers ask us to manufacture wafers to meet all their requirements in power consumption, performance, yield, cost, and schedule, we must learn to satisfy them. Only in this way can they view us as true long-term partners to ensure their success. This requires a change in mindset, and I am driving this transformation within Intel Corporation's foundry to position the business for long-term success." This indicates that Intel Corporation is actively positioning itself as a scalable solution to external foundry opportunities. With the rapid growth in demand for custom ASICs, Alphabet Inc. Class C currently stands as one of the most strategically significant potential customers for Intel Corporation's foundry services. Potential tailwinds for Intel Corporation's product department The recent momentum of Alphabet Inc. Class C's TPU may also benefit Intel Corporation's product department's streamlined AI roadmap, as it focuses on the increasing demand for inference and cost-optimized computing solutions in the market. Specifically, under the leadership of Pat Gelsinger, Intel Corporation's product department's AI strategy is increasingly focused on optimizing inference performance and cost-effectiveness, while also targeting custom ASIC opportunities. This aligns with Intel Corporation's upcoming "Crescent Island" - its latest AI processor planned to start shipping next year. Crescent Island is optimized for AI inference workloads, promising high energy-efficient performance when deployed at scale. More importantly, Intel Corporation's product department's AI roadmap is also increasingly focused on custom ASIC opportunities. The company's product department recently established the "Central Engineering Group" to lead the construction of Intel Corporation's new ASICs and design services business, offering customized chips to a wide range of external customers. This aligns with recent disclosures from management that they aim for Intel Corporation to play a more crucial role in the custom ASIC market - especially in opportunities that drive AI computing, a field currently dominated by Broadcom Inc. (AVGO.US) and Marvell Technology, Inc. (MRVL.US). Intel Corporation's ability to address emerging custom ASIC opportunities is also validated through its recent collaboration with NVIDIA Corporation. Reports indicate that Intel Corporation will deploy custom Xeon CPUs for NVIDIA Corporation's next-generation systems using NVLink. Intel Corporation will also develop system-level chips based on its proprietary x86 architecture, integrated into NVIDIA Corporation's RTX GPU small chips for PC applications. While Alphabet Inc. Class C is unlikely to sever ties with its long-term TPU development partner Broadcom Inc. in joint development of the next generation TPUs, the success of these processors may encourage further adoption of custom AI ASICs. This could prove beneficial for Intel Corporation's product department as it focuses on custom ASIC opportunities related to Alphabet Inc. Class C. Intel Corporation's focus on custom ASIC opportunities also positions it favorably in providing specific components for the next generation custom processors of Alphabet Inc. Class C. It has been reported that Alphabet Inc. Class C has been working with MediaTek to handle I/O modules and peripheral interfaces for its Ironwood TPU. This leaves room for similar collaborations with Intel Corporation, especially considering their recent validation of building custom components through collaborations with NVIDIA Corporation. Alphabet Inc. Class C's scope in custom chips is also expanding beyond TPUs. The company recently launched its first custom CPU - Axion - based on ARM's Neoverse V2 platform. Although this competes with Intel Corporation's x86 architecture, it does not rule out the potential for Intel Corporation to participate in future collaborations. Specifically, Intel Corporation has been strengthening its collaboration with ARM technology in recent years to ensure its product and foundry units are best positioned to capitalize on market opportunities. For example, following an agreement between the two companies in 2023, Intel Corporation's 18A process is now compatible with manufacturing ARM-based processors. The changing industry dynamics also support the adoption of custom ASICs in AI computing - a favorable trend for Intel Corporation's product department. Specifically, the increasingly stringent power constraints are raising the industry's demand for optimizing "efficiency per watt per dollar." While NVIDIA Corporation's GPUs currently offer the most versatile adaptive performance and can meet a wide range of workload demands, this adaptability also leads to higher power consumption and operating costs. Thus, the adoption of custom ASICs like Alphabet Inc. Class C's TPU, designed to efficiently handle specific AI workloads, is favored in AI computing. Combined with the current supply constraints of NVIDIA Corporation's AI processors, the environment is becoming more conducive to the adoption of custom AI accelerators. This strengthens the new tailwinds faced by Intel Corporation's product department as it targets opportunities for custom AI processors related to Alphabet Inc. Class C. In conclusion, the strong demand for custom ASICs in the market, coupled with the breakthrough of Alphabet Inc. Class C's TPU, indicates that Intel Corporation's AI strategy under the leadership of Pat Gelsinger is becoming more compelling. This, in turn, increases the potential for its product department's custom chip design capabilities and its foundry services' manufacturing and advanced packaging solutions to receive external collaboration opportunities, potentially substantially boosting Intel Corporation's growth prospects. Stronger growth also helps Intel Corporation's product department and foundry services achieve scalability more quickly, strengthening the prospects for long-term profitability growth and solidifying the sustainability of its current valuation premium. In summary, this background positions Intel Corporation to potentially achieve more external partnerships in the short term. Based on its recent collaboration with NVIDIA Corporation, Intel Corporation is especially well-positioned to cooperate with hyperscale suppliers, as both are currently deeply involved in the intense arms race of custom AI processors. The recent momentum of Alphabet Inc. Class C's TPU also enhances the prospects for Intel Corporation's products and foundry services. With the industry's increasing demand for customized AI computing, Intel Corporation under Pat Gelsinger's leadership is executing its transformation strategy, paving the way for a trustworthy valuation reassessment catalyst and strengthening the sustainability of its current recovery trend.