✦ Custom Silicon: Chips Designed for One BuyerThin moat

Intel (INTC) — the future bets

Intel's fastest-growing product is chips it designs for customers who would otherwise design them to replace Intel's.

Intel's fastest-growing product line is chips it designs for a single customer. Management said purpose-built silicon, application-specific chips for particular customers, was nearly tripling year over year in the second quarter of 20261. Other Data Center and AI revenue, outside the main server processors, was $951 million in the quarter2.

Data Center and AI, Q2 2026 ($M)6,262Total segment revenue951Other DCAI revenueIntel Q2 2026 results release and 10-Q
A small line growing fastest.

The customers are the companies that would otherwise design around Intel. Intel announced a multiyear collaboration with Google on Xeon processors and a custom infrastructure processing unit3, and custom silicon work with Fortinet4. Its 10-K lists Broadcom as a competitor in this market5.

Custom silicon has two attractions for Intel. It turns hyperscalers from rivals into customers, and it can be built in Intel's own factories, giving the foundry work that is internal on paper but external in substance.

It also has the weakness of all custom work: each design serves one buyer, and the buyer can take the next one elsewhere.

The business also uses Intel's advanced packaging, where outside demand has come first. Management pointed to a growing backlog for EMIB-T packaging on the second-quarter 2026 call6. Custom chips and packaging together are the parts of Intel's offering a customer can adopt without betting its whole product on Intel's process.

The bet is real and small. The number that would show it growing into a business is a separate disclosure of custom silicon revenue; Intel reporting it at more than $1 billion a quarter would say it has become a second leg for the data center group.

Moat trajectory: Widening

Nearly tripling year over year in Q2 2026.

The number that tests this moat
Reported
Other Data Center and AI revenue, latest quarter
$951M (Q2 2026)

The line holding custom silicon; growth past $1bn a quarter would make it a second leg.

Source: Intel Form 10-Q, Q2 2026 ↗
References
  1. ReportedManagement said purpose-built silicon, application-specific chips for particular customers, was nearly tripling year over year in the second quarter of 2026.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
  2. ReportedOther Data Center and AI revenue, outside the main server processors, was $951 million in the quarter.
    Intel Form 10-Q for the quarter ended 27 June 2026 - segments, the Ireland SCIP repurchase, escrowed shares, Intel 14A, customer deposits and debt. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedIntel announced a multiyear collaboration with Google on Xeon processors and a custom infrastructure processing unit, and custom silicon work with Fortinet.
    Intel first-quarter 2026 results release, Form 8-K exhibit 99.1. — Q1 2026 · publ. 23 April 2026 · source ↗
  4. ReportedIntel announced a multiyear collaboration with Google on Xeon processors and a custom infrastructure processing unit, and custom silicon work with Fortinet.
    Intel second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 23 July 2026 · source ↗
  5. ReportedIts 10-K lists Broadcom as a competitor in this market.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  6. ReportedManagement pointed to a growing backlog for EMIB-T packaging on the second-quarter 2026 call.
    Intel Q2 2026 earnings call prepared remarks (CEO and CFO). — Q2 2026 · publ. 23 July 2026 · source ↗
Sources
Generated September 25, 2026