By William Gavin
The company is reportedly working with South Korea's SK Hynix on new chip-packaging technology
Intel's foundry business is close to closing &#34;some deals&#34; that are worth billions of dollars per year in terms of packaging revenue, according to an executive.
Investors increasingly see signs that Intel's manufacturing business is gaining momentum - and the latest source of optimism is a new report suggesting that Korean semiconductor firm SK Hynix might soon become a partner.
SK Hynix (KR:000660) has reportedly started working with Intel (INTC) on research and development for 2.5D packing technology, according to ZDNet Korea. SK Hynix is also considering adopting Intel's 2.5D packaging technology called Embedded Multi-Die Interconnect Bridge, or EMIB, the report said.
Packaging is a process through which a company packs semiconductor chips into a protective shell that keeps them safe and makes them easier to install. Intel says its EMIB process helps scale performance and functionality of semiconductor designs.
SK Hynix is testing out integrating high-bandwidth memory, a memory-chip architecture that can help reduce power consumption and boost bandwidth, by using Intel's EMIB, according to the report.
Intel shares rose almost 4% in early trading on Monday before gains were pared back. The stock has surged more than 90% over the last month as investors cheer the company's transformation into a cornerstone of the artificial-intelligence buildout.
Read more: Intel's stock just had its most explosive growth ever. Why skeptics are piling on.
SK Hynix shares in South Korea closed up more than 11%, reaching 1,880,000 won (equivalent to $1,279.15) in Monday trading. The stock had reached an intraday high of 1,949,000 won following the report.
The companies did not immediately return a request for comment.
The reported collaboration comes amid a &#34;severe shortage&#34; in global packaging capacity, according to the research firm TrendForce. Part of that is because industry leader Taiwan Semiconductor Manufacturing's (TW:2330) Chip-on-Wafer-on-Substrate-with-Silicon packaging technology has seen an extreme supply-demand mismatch in recent years, according to the company.
That has left customers seeking alternatives, which has benefited firms like Amkor Technology (AMKR), according to TrendForce. Intel's EMIB technology has also gained some traction.
That bottleneck is expected to begin easing slightly by next year, as TSMC aims to expand its capacity by over 60% by 2027, according to TrendForce.
While Intel commands the second-greatest 2.5D packaging capacity, TSMC has a clear lead on the U.S. chip maker. Intel's share of global capacity currently stands at about 13.7%, compared with TSMC's 69.8%, and is expected to fall to 11.8% in 2027, according to TrendForce's projections.
Despite that forecast, Intel still expects packaging to become a big business. At a Morgan Stanley conference in March, Intel's chief financial officer, David Zinsner, said that EMIB and its more advanced EMIB-T process have been getting &#34;really good engagement&#34; from customers.
Last month, Amazon (AMZN) and Google-parent Alphabet (GOOG) (GOOGL) were reported to be in talks to use Intel's packaging services. Intel previously told MarketWatch that it cannot comment on rumors.
Zinsner in March said that Intel's foundry business is near to closing &#34;some deals&#34; that are worth billions of dollars per year in terms of packaging revenue. &#34;So low and behold, this is going to be a really good business for us,&#34; Zinsner added, according to a transcript.
-William Gavin
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05-11-26 1128ET

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Intel's stock has surged over 90% in the past month, driven by optimism surrounding its foundry business and a potential partnership with SK Hynix on new chip-packaging technology. The collaboration aims to enhance 2.5D packaging capabilities, which could significantly boost Intel's revenue. Despite facing competition from TSMC, Intel's EMIB technology is gaining traction, and the company anticipates substantial growth in its packaging business. Investors are encouraged by signs of momentum in Intel's manufacturing sector, with shares rising nearly 4% in early trading.

- Intel is reportedly collaborating with SK Hynix on advanced chip-packaging technology, particularly 2.5D packing, which could generate billions in annual revenue.  
- The partnership comes amid a global shortage of packaging capacity, with Intel looking to leverage its EMIB technology to meet increasing demand.  
- Despite a projected decline in market share, Intel remains optimistic about its foundry business's growth potential, with significant interest from major tech firms like Amazon and Google.

Intel's stock extends its hot streak. This is the latest source of optimism.