Intel has secured significant contracts worth billions to manufacture semiconductors for both Amazon and the US government, leading to an 8% increase in its stock value during after-hours trading.

The US government has committed up to $3 billion to Intel for the production of advanced chips intended for military applications. This announcement supplements an earlier pledge that included $8.5 billion in grants and potential loans totaling $11 billion to enhance chip manufacturing within the United States.

In addition to the government contract, Intel has also struck a lucrative deal with Amazon for the design of custom chips.

Founded in 1968 and headquartered in Mountain View, California, Intel has significantly benefited from the Biden administration’s Chips and Science Act, which aims to incentivize American companies to invest in domestic chip manufacturing through tax benefits, grants, and loan guarantees.

Despite these positive developments, Intel’s stock price has seen a dramatic decline, dropping by more than half this year. Investor concerns have primarily centered around the company lagging in the competitive race for artificial intelligence (AI) chips amid decreasing demand for traditional data center processors and growing competition in the PC market.

Recently, Intel announced plans to reduce its workforce by 15,000 positions and implemented a cost-cutting strategy, also revealing expectations of lower revenue for the upcoming quarter while suspending its dividend.

In a memo detailing Intel’s strategy for recovery, CEO Pat Gelsinger indicated that the company will develop an “artificial intelligence fabric chip” for Amazon using its most advanced manufacturing technology, the 18A process node.

Furthermore, Intel intends to divest a portion of its stake in Altera, its programmable chip subsidiary. Gelsinger’s memo also noted a two-year halt on construction projects in Germany and Poland.

The company plans to retain its manufacturing operations in-house while also establishing its foundry business as a separate subsidiary capable of attracting outside investment. Earlier this year, Intel had already delineated the financial performance of this foundry segment from its design operations.

Despite facing critical assessments regarding his leadership due to the plummeting shares, Gelsinger reported that the recent board meeting was “highly productive and supportive.” He emphasized the necessity for continued efforts to enhance efficiency, profitability, and competitive standing in the market.

As of Monday, Intel’s stock closed at $20.91, marking a 6.4% increase, and rose an additional 8.1% to reach $22.60 in extended trading sessions.