People familiar with the matter said that Alphabet's Google has placed an order with Intel to produce more than 3 million tensor processing units (TPUs) in 2028. Nvidia is also evaluating whether Intel's technology can be used to make processors that combine four graphics chips into a single unit, although the company has not yet placed an order with Intel, the report said.

Intel shares rose more than 9% in early trading, driven by signs of a steady improvement in business under Chief Executive Officer Chen Liwu, and are on track to expand their year-to-date gains to nearly 169%.

Potential orders for Google's self-developed AI chips will boost Intel's foundry business as the company attempts to regain the chipmaking dominance it lost to TSMC due to years of management missteps.

Demand for chips has surged, driven by the artificial intelligence boom, leaving TSMC struggling to meet adequate supplies. Capacity shortages have prompted several major artificial intelligence chip design companies to turn to Intel.

Jacob Byrne, a technology analyst at eMarketer, said the news "proves that the giants in AI are scrambling to decentralize the supply chain, which currently remains highly concentrated at TSMC."

Since Chen took over, Intel has received billions of dollars in investment from the Trump administration, Nvidia and SoftBank.

Intel also successfully selected Tesla as its first major customer for its next-generation 14A process, producing chips for the "Terafab" project, an advanced AI chip complex planned by Elon Musk in Austin.

The Trump administration has also been trying to win business for Intel, an official said last month.

"In addition to regular diversification needs, Google and Nvidia are more motivated than ever to work with Intel. Supporting Intel is supporting American manufacturing, which is critical to the relationship with the U.S. government," said D.A. Davidson analyst Gil Luria.

It was reported last month that after more than a year of intensive negotiations, Intel had reached a preliminary agreement with Apple to produce some chips for Apple devices.

At the same time, Google has been working hard to build its self-developed AI chips into a viable alternative to Nvidia-led GPUs, and the sales of its tensor processing units (TPUs) have become an important driving force for the company's cloud business revenue growth.