Intel's $1B custom ASIC push wins Microsoft as first major client
Intel is expanding its custom chip business, aiming to turn it into a major revenue stream. The company has already secured Microsoft as its first high-profile external customer for its advanced Intel 18A-P process. This move comes as Intel positions itself to compete in the $100 billion custom ASIC market.
In September 2025, Intel formed the Central Engineering Group to focus on custom chip design for outside clients. The team is led by Srini Iyengar, who previously worked at Cadence Design Systems. Under his leadership, the division has seen rapid growth, with revenues rising by over 50% in 2025 and 26% in the last quarter alone. The business now generates more than $1 billion in annualised revenue.
Intel's custom chip services cover everything from design and intellectual property to manufacturing and packaging. This all-in-one approach gives it an edge in attracting customers. CEO Lip-Bu Tan, who also has a background at Cadence, is pushing to scale this part of the business further.
Winning external clients like Microsoft is crucial for Intel's foundry operations. These deals help justify the high costs of developing cutting-edge semiconductor processes. The company faces strong competition from rivals such as Broadcom and Marvell in the custom ASIC space.
Intel's custom chip division is on track to become a multi-billion-dollar operation. The company's ability to secure major customers and bundle services could strengthen its position in the semiconductor industry. Growth in this area may play a key role in Intel's broader recovery strategy.
